To calculate sustainability ratings for retirement plans, target date funds, and other mutual funds, we have to know what they're invested in. We depend on research from investor research firms and non-profit advocacy groups to identify companies within a fund portfolio as sustainability risks.
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The fossil fuel grade is based on the fund’s exposure to five fossil fuel screen lists, tracking several thousand companies primarily in the energy and utility sectors. The grade is also impacted by exposure to companies from the fossil fuel finance screen, and the fossil fuel insurance screen.
Top carbon reserve owners: Carbon Underground 200™
The Carbon Underground 200™, compiled and maintained by FFI Solutions, identifies the top 100 coal and the top 100 oil and gas publicly-traded reserve holders globally, ranked by the potential carbon emissions content of their reported reserves.
The Carbon Underground 200™ is a proprietary list. Contact FFI Solutions for more information.
The coal industry screen consists of companies designated by Morningstar industry classifications as Thermal Coal or Coking Coal; companies from the Global Coal Exit List marked as Mining or Services for Coal Industry Sector; and the top 100 coal reserve holders from the Carbon Underground 200™
The oil/gas screen consists of companies designated by Morningstar industry classifications as Oil and Gas Drilling, Oil and Gas Extraction and Production, Oil and Gas Equipment and Services, Oil and Gas Integrated, Oil and Gas Midstream, and Oil and Gas Refining and Marketing; upstream and midstream companies from the Global Oil/Gas Exit List; and the top 100 oil/gas reserve holders from the Carbon Underground 200™.
Top coal-fired utilities: Macroclimate® 30
The Macroclimate® 30 is an exclusion list of the 30 largest public-company owners of coal-fired power plants in Developed Markets plus China and India. Macroclimate® compiled the list of 30 companies using open-source data on coal-fired power plants worldwide.
The fossil-fired utilities screen consists of companies designated by Morningstar industry classifications as Utilities-Independent Power Producers, Utilities-Renewable, Utilities-Diversified, Utilities-Regulated Electric, and Utilities-Regulated Gas. (Despite the name, the Utilities-Renewable industry classification includes companies that distribute gas and/or burn fossil fuel for power generation.) It also includes companies from the Global Coal Exit List marked as Power for Coal Industry Sector. We remove any companies in these categories that are engaged in 100% renewable operations, pure transmission, or otherwise don't distribute gas or burn fossil fuels to generate power. We also remove a small number of utilities that have fossil fuel operations but meet the criteria for inclusion on our Clean200 screen - USD revenue of at least $1 billion, and over 50% of total revenues are from green sources, as measured by Corporate Knights Research.
Fossil fuel finance
The fossil fuel finance grade is based on the fund’s exposure to banks that provide lending to fossil fuels.
Banks financing fossil fuels
The fossil fuel finance screen consists of 60 of the largest commercial and investment banks, from the Banking on Climate Chaos report. The data tracks the total fossil fuel financing of these banks over 2016-2021: lending, and underwriting debt and equity issuances.
Fossil fuel insurance
The fossil fuel insurance grade is based on the fund’s exposure to insurers that underwrite and invest in fossil fuels.
Insurance companies underwriting fossil fuels
The fossil fuel insurance screen consists of 30 of the largest primary insurers and reinsurers, from the Insure Our Future Scorecard. The data rates the fossil fuel insurance policies of these companies.
The deforestation grade is based on the fund’s exposure to a list of deforestation-risk companies identified in partnership with Friends of the Earth U.S., compiled from independent research as well as from existing resources within the civil society research and investor advocacy communities on forest-risk companies, including Forests & Finance, Forest500, CDP Forests, Supply Change.org and ZSL SPOTT. The screens include deforestation-risk agricultural commodity producer/traders (palm oil, paper/pulp, rubber, timber, cattle, and soy); financial companies involved in lending and underwriting to deforestation-risk producers and traders; and major consumer goods companies that source from deforestation-risk producers and traders.
The screens are split into two tiers, with investments in producer/traders considered a higher risk.
Deforestation-risk agricultural commodity producer/traders
Companies that produce and trade palm oil, paper/pulp, rubber, timber, cattle, and soy, and have a past record or a significant risk of contributing to deforestation, land grabbing, and human rights abuses.
Banks and lenders
Financial institutions directly and indirectly involved in underwriting and lending to deforestation-risk producers and traders. These are the publicly listed banks drawn from the platform Forests & Finance.
Major consumer brands
Consumer goods retailers that source palm oil, paper/pulp, rubber, timber, cattle, and soy from deforestation-risk producers and traders and sell it to consumers worldwide.
The gender equality grade is based on corporate data from Equileap that tracks how companies perform on four gender equality subcategories: gender balance in leadership and workforce; equal compensation and work life balance; policies promoting gender equality; and commitment, transparency, and accountability.
The Equileap Gender Equality Scorecard is a proprietary dataset. Contact Equileap for more information.
The civilian firearm grade is based on the fund’s exposure to two screen lists: civilian firearm manufacturers, and retailers that sell firearms or ammunition to the civilian market.
The screens are split into two tiers, with investments in civilian firearm manufacturers considered a higher risk.
The leading publicly-traded companies involved in manufacturing civilian firearms including handguns, rifles, assault weapons, and ammunition.
Large publicly-traded companies that sell firearms or ammunition to the civilian market.
Prison industrial complex
The prison industrial complex grade is based on the fund’s exposure to two screen lists: prison industry companies, and border industry companies. All the companies on both lists are identified by the American Friends Service Committee’s Investigate project.
The screens are split into two tiers, with both the prison industry and border industry screens having a subset of companies considered a higher risk.
The prison industry screen flags companies involved in incarceration and detention facilities (including facility management, youth and family detention, private facilities internationally, private prison financing, transportation and deportations, facility surveillance and security, and prison labor), services in facilities (including communication services, health services, banking and financial services, and food, commissary, and other goods), and supervision and monitoring (including e-carceration, community corrections, and bail bonds).
The border industry screen flags companies involved in incarceration and detention facilities (including facility management, youth and family detention, private prison financing, facility surveillance and security, transportation and deportations, and prison labor), militarization of the U.S.-Mexico border (including border construction and maintenance and border monitoring and surveillance), and immigrant monitoring and surveillance (including high-tech surveillance of immigrants, e-carceration, and bail bonds).
High-risk prison industrial complex
The high-risk prison industrial complex screen flags companies from the prison industry and border industry screens that are recommended for divestment by the American Friends Service Committee state violence criteria.
Private prison operators
For-profit private contractors that have contracts with cities, counties, states, and the federal government to operate prisons, jails, and immigration jails. Any investments in these companies earn a fund an automatic F.
The military weapons grade is based on the fund’s exposure to three screen lists of arms manufacturers and military contractors: publicly-traded companies from the Stockholm International Peace Research Institute (SIPRI) Arms Industry Database, and screens for nuclear weapons manufacturers/servicers and manufacturers of cluster munitions identified by Dutch peace group PAX.
Major military contractors
Publicly-traded companies from the Stockholm International Peace Research Institute (SIPRI) Arms Industry Database. The database contains information on arms-producing and military services, including financial data for arms-producing companies in the OECD and developing countries (except China) based on open sources. (Last updated with 2018 data.)
Nuclear weapons manufacturers/servicers
To track manufacturers and servicers of nuclear weapons, we used the research report Producing Mass Destruction: Private companies and the nuclear weapon industry (2019) from the peace organization PAX.
To track manufacturers of cluster munitions and landmines, we used the research report Worldwide investments in Cluster Munitions a shared responsibility (2018) from the peace organization PAX. Any investments in these companies earn a fund an automatic F.
The tobacco grade is based on the fund’s exposure to two screen lists: tobacco companies that either produce tobacco or manufacture tobacco products identified by industry classifications; and a list of entertainment companies that promote tobacco to young audiences, identified by research from the University of California, San Francisco Center for Tobacco Control Research and Education Smoke Free Movies Database.
The screens are split into two tiers, with investments in tobacco producer/manufacturers considered a higher risk.
Identified using Morningstar industry categories, these companies either produce tobacco or manufacture tobacco products.
Entertainment companies that promote smoking to kids
There is scientific consensus that exposure to tobacco in movies causes kids to begin smoking. These entertainment companies promote smoking by producing kid-rated movies that depict smoking.
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