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Topics: Research

ESG Constraints with Smartleaf

Smartleaf makes it easy to implement Environmental, Social and Governance (ESG) restrictions.  We were curious about what happens to ESG constraint usage when operational barriers were removed, so we looked at ESG use on accounts managed on the Smartleaf system.

ESG use is still small, but growing

ESG use is still the exception, not the rule. Approximately 3% of equity accounts utilize ESG constraints, but the overall number is growing by almost 10% per year.

Which social screens are most important to investors?

social_screens_final.png

 

Tobacco is the most used ESG constraint—60% of accounts with social screens excluded tobacco companies, which includes tobacco producers, as well any tobacco "distributor", "retailer" or "supplier" who generates 15% or more of their total revenue through tobacco.

The Tobacco social screen is part of a larger Catholic Values filter, which is used in some variation by over 30% of accounts with Social Screens. The Catholic Values filter includes the following values exclusions: 

Alcohol
Gambling
Civilian Firearms
Nuclear Power  
Adult Entertainment
Military Weapons  
Genetically Modified Organisms
 Abortifacients  
Contraceptives
 Stem Cells


How do investors implement Smartleaf Social Screens?

Over 67% of accounts utilizing social screens have more than one filter.  Here is a breakdown of usage:

ss_per_account.jpg

With Smartleaf ESG Social Screens, you can choose as little or as many filters to customize your asset allocation.

 

Topics: Research

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