How EdenTree screens out the negative impact of Oppressive Regimes

4 April 2022

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How EdenTree screens out the negative impact of Oppressive Regimes

At EdenTree, our investment philosophy focuses on being responsible and sustainable, while providing performance with principles. One important aspect of maintaining this is our screening process, our Responsible Investment Team oversee various aspects of stock analysis prior to investment, with a negative screen aiming to remove potentially irresponsible investments at an early stage.

One part of this screen deals with oppressive regimes. In an increasingly interconnected world, businesses can be exposed to different regions, sectors and risks, with the possibility of operating under an oppressive regime being one of these. Russia has been excluded under our oppressive regimes negative screen since this was first introduced. We do not (and have never) held Russian sovereign bonds, nor do we invest in any state-owned or controlled companies, or those facilitating the government’s regime or military activity in any way.

Take a look at what constitutes an oppressive regime, how they can be identified and why it is so important for any responsible investor to be aware of this risk.

THE CHARACTERISTICS OF OPPRESSIVE REGIMES

Our concern over Oppressive Regimes is intrinsically linked to human rights. From a human rights perspective, below are some of the characteristics which are likely to be prevalent in countries on our ‘Oppressive Regimes’ list:
• Authoritarian (single-party, tribal or Monarchic government); or totalitarian (military or civilian dictatorship)
• Absence of the rule of law; arbitrary detention; disappearances; extra-judicial executions
• Persecutions of sections of society, possibly including ‘ethnic cleansing’, genocide, persecution of religious and ethnic minorities
• Torture used as part of the judicial or extra-judicial process
• Suppression of civil society institutions
• Restrictions on freedom of expression; persecution of human rights advocates, trades unions
• Restrictions on freedom of movement; forced deportation
• Restrictions on media, including censorship, surveillance, and persecution
• State-sanctioned slave- or bonded- labour; systemic child labour
• State-sponsored persecution or discrimination of women and girls by virtue of gender (e.g. FGM)
• Occupation of disputed territories
Human rights risks are therefore more acute for companies operating in – or with exposure to – countries with Oppressive Regimes. Identification of these countries helps us decide how exposed a company may be to potential human rights abuses, and how complicit it may be in any abuses.

To learn more about our approach, download the EdenTree Expert Briefing on OppresiveRegimes HERE

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