If I want my money to match my values, I need a written screen, not a gut feel. The article boils ethical investing down to 5 steps: set rules, check data, apply a pass/fail test, spot greenwashing, and review holdings on set dates like 13 Jan and 13 Jul.

Here’s the core idea in plain terms: I should decide what I will not own first, such as tobacco, weapons, gambling, or coal above a set revenue cut-off. Then I should look for proof in reports, fund papers, ratings, news, and SGX or MAS filings. If a stock or fund fails a hard rule, it’s out. If it passes, I can score what’s left on things like board setup, carbon targets, worker safety, and anti-corruption disclosure.

The article also makes two points that matter:

• Ethical screening does not promise better returns
• ESG labels alone are not enough
• One good year of data is not enough; 3 to 5 years is better
• More than 70% of broad ESG funds cited in the article were said to be misaligned with climate targets
• Position caps of 5% to 10% per holding can help control risk
• Sector caps of 10% to 15% may make sense for higher-risk areas

What I like about this piece is that it treats ethical investing as a repeatable checklist, not a slogan. It tells me to use clear revenue limits, write down exceptions, log reasons for every fail, and set exit rules before trouble starts.

A quick view of the 5 steps:

If I had to sum it up in one line: pick your rules first, verify everything, and review often.

Socially Responsible Investing: How to Align Your Values with Your Money (SRI Guide)

Step 1: Define Your Ethical Criteria Before Looking at Any Investment

Start by writing down what you will and will not accept in a portfolio. Use the same checklist for shares, REITs, unit trusts, and ETFs listed on SGX or bought through local brokers. Once your criteria are fixed, you can move on to the next step: gathering evidence.

Set Exclusion Rules for Activities You Will Not Fund

Exclusion rules are your hard limits. They spell out the activities you won’t fund, no matter how good the returns may look.

The key is to use clear thresholds, not fuzzy labels. For example, some ethical policies exclude companies where more than 5% of revenue comes from tobacco, and companies where more than 30% of revenue comes from thermal coal mining or coal-based power generation. You can use those same cut-offs or tweak them to match your own values.

For Singapore investors, practical exclusion categories include:

• Tobacco
• Controversial weapons
• Gambling operations
• Thermal coal
• Companies with repeated labour violations documented in the past five years

Write each rule in plain terms with a set threshold. That way, every holding gets judged by the same standard.

Set Positive ESG Standards You Want to See

Negative screens cut out the worst options. Positive standards help you pick the better ones from what’s left. These are the minimum ESG qualities you want to see before an investment earns a spot in your portfolio.

Set measurable positives, such as Paris-aligned carbon targets, at least one-third independent directors, improving safety records, and clear anti-corruption disclosure. For funds, check whether the prospectus or ESG factsheet spells out the strategy, criteria, metrics, and engagement policy.

A simple screening table makes this much easier to manage:

Fill in the pass/fail column using the annual report, sustainability report, or fund factsheet. It’s also smart to add a Last reviewed on column, so you know when each check was done. Use this table as your screening record.

Next, gather the ESG data needed to test each rule.

Step 2: Gather ESG Data from Reliable Sources

Once your criteria are set, you need evidence to test each rule. Step 1 gave you the exclusion rules and positive standards. Now it’s time to gather proof and check whether a company or fund actually meets them.

Read Company Reports, Fund Prospectuses, and ESG Factsheets

For Singapore-listed companies, start with the annual report for governance disclosures. Then read the sustainability report for hard ESG numbers, such as emissions, workplace injury rates, and diversity figures.

Use three to five years of data. One year isn’t enough. A single good year can hide a messy pattern.

For funds, your main documents are the prospectus and ESG factsheet. MAS requires ESG fund prospectuses to disclose the ESG focus, criteria, metrics, strategy, minimum ESG allocation, benchmark, and ESG-related risks. ESG fund annual reports must also show how much of the portfolio met the stated ESG focus and what engagement actions were taken.

Be careful with vague labels like “sustainable leaders” or “strong sustainability profile”. Those phrases can sound nice on paper, but they don’t tell you much on their own. Check the criteria behind the label.

Check Independent Ratings, News, and Regulatory Filings

Independent ESG ratings from providers such as MSCI and Sustainalytics can help, but they shouldn’t make the decision for you. Think of them as a second opinion. Scores often differ, so use them to spot issues that need a closer look, not to decide pass or fail on their own.

Then look beyond company materials. Search recent news and controversy databases for fines, labour disputes, pollution, privacy breaches, or corruption. This is where the nice story in a report gets tested against what happened in public.

You should also check SGX announcements and MAS-related notices. These give you an official record of enforcement actions and disclosure breaches.

The table below shows how each source fits into your review:

Use these sources to apply your pass-fail screen in the next step.

Step 3: Apply the Screen Using a Pass-Fail Framework

Now turn the evidence into a clear pass-fail call. Use the same rules for every candidate so your results stay consistent. First, decide what level you’re screening: company, fund, or portfolio.

Remove Investments That Fail Your Negative Screens

Negative screens are your hard lines. If an investment crosses one, it fails straight away. That includes unresolved major controversies, confirmed regulatory breaches, severe labour-rights abuses, or repeated governance problems.

Exposure can be a bit more nuanced. Say a company has only limited exposure to a banned activity. In that case, set your threshold upfront. For example, you might reject any issuer that gets more than a stated percentage of revenue from that source. For edge cases, set a default rule in advance: either fail when evidence is incomplete or send the case for manual review.

If you make an exception, write it down. Record the reason, who signed off on it, and when you’ll review it again.

Rank the Remaining Options by Positive ESG Strength

After removing disqualified candidates, rank what’s left. Positive screening is about relative strength. It’s not enough for something to carry a generic ESG label.

Pick three to five weighted factors, such as:

• carbon intensity
• renewable energy transition plans
• workforce safety
• human-rights policies
• board independence

Give each factor a score from 1 to 5, apply your weightings, and add up the total.

The table below shows what a finished screen can look like across four candidates:

Add one short reason for every fail. That way, your checklist becomes a decision record, not just a yes-or-no exercise. It also makes your next review much easier.

Next, test the shortlist for greenwashing and material ESG risks.

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Step 4: Check for Greenwashing and Material ESG Risks

After the Step 3 screen, the next job is simple: see if the ESG label still stands when you look at the proof. Use your Step 3 shortlist and test each ESG claim against the holdings, disclosures, and hard evidence.

Compare ESG Claims Against Holdings and Measurable Evidence

Start with the company’s annual report and sustainability report, or the fund’s prospectus, factsheet, and marketing materials. Write down every main ESG claim. That could include phrases like “excludes fossil fuels”, “net-zero by 2050”, or “supports fair labour practices”. Then pull the latest portfolio holdings and check whether the assets line up with those claims.

Research cited by TIME found that more than 70% of broad ESG funds were misaligned with global climate targets, and some climate-themed funds marketed as “fossil-fuel screened” still held shares in companies like Marathon Petroleum and Phillips 66.

This is where vague language falls apart fast. A “carbon neutral” claim should come with an emissions inventory, a clear reduction path, and independently verified offset certificates. A “100% renewable energy” claim should point to power purchase agreements or renewable energy certificates, not just a nice-sounding promise in a brochure. If the proof is thin or unclear, treat the claim as weak.

It also helps to compare the numbers across documents. Check emissions data, targets, and other key figures in the sustainability report, annual report, and marketing deck. If the figures don’t match, that’s an early sign that greenwashing risk may be in play.

And even if the holdings fit the claim, don’t stop there. You still need to see whether the company’s conduct and governance line up too.

Review Controversies, Compliance, and Governance Quality

This part is about how the company or fund manager deals with past problems. If there have been environmental incidents, labour disputes, corruption claims, or regulatory penalties, look for proof that they took action and fixed the issue. A short mention in a report isn’t enough. You want documented steps that can be checked.

Repeated controversies with no solid remediation are a strong sign that the ethical profile is shaky, even if the marketing says all the right things.

Governance matters just as much. Look at whether the board has enough independent directors, whether the chair and chief executive roles are split, and whether ESG oversight sits with a named committee. For funds, review whether the manager’s proxy voting and company engagement match the ethical position they promote.

Use this table as a quick test:

For investors in Singapore, MAS disclosure guidelines require retail ESG funds to clearly state their ESG focus, the criteria and metrics used, the minimum allocation to ESG-aligned assets, and whether a benchmark index is relevant, along with the related risks. If a company or fund can’t meet those basic disclosure standards, it should fail this screen until the disclosure is complete and consistent.

Fail any investment that cannot back up its claims with holdings, metrics, and independent evidence, or that still carries unresolved major controversies.

Step 5: Add Ethical Screening to Portfolio Decisions and Ongoing Reviews

Ethical screening shouldn’t happen only when you first buy a holding. Things change. ESG ratings move, controversies surface, and a company or fund that once fit your rules can drift out of line. If you only check at the start, you may end up holding something that no longer matches your standards.

The fix is simple: turn ethical screening into a repeatable review cycle.

Set Review Dates, Portfolio Limits, and Exit Rules

Set review dates in advance and treat them like any other part of your portfolio process. Review equity holdings and actively managed funds every six months – for example, 13 Jan and 13 Jul each year. For steadier instruments like broad ESG index funds or green bonds, do an annual review. Put these dates in your calendar and tie them to your usual portfolio check-ins. In short, review active holdings every six months and slower-moving holdings at least once a year.

Position size matters too. For Singapore-based investors, a sensible rule is to cap any single ESG holding at 5–10% of total portfolio value. If a holding has medium-to-high ESG risk, use a tighter cap. And for higher-risk sectors such as fossil fuels, even when a company meets your minimum ESG score, it may still make sense to cap total sector exposure at 10–15% of the overall portfolio.

Exit rules need to be written down before there’s a problem. Be clear about what triggers action:

• An ESG rating cut below your minimum threshold
• A severe environmental, labour, or corruption issue
• A regulatory enforcement action from MAS or a foreign regulator

Then match each trigger to a fixed response. For example, you might require a review within 30 days of a downgrade, cut the position by 25–50% if the issue is moderate but showing signs of improvement, or exit fully if the problem is severe and still unresolved after six months. Put each trigger and response into your monitoring table so you don’t have to make rushed decisions in the moment.

Use a Monitoring Table to Keep the Process Consistent

A simple monitoring table helps you stay consistent. It takes the guesswork out of reviews and gives you a clear record of what changed, what you did, and what comes next. Update it at each scheduled review and after any material ESG event.

If you trade systematically, use the ethical screen first to create an approved list. Then apply your entry rules and position sizing only to holdings that pass. That fits well with the rules-based, disciplined approach taught at Collin Seow Trading Academy.

Conclusion: A 5-Step Checklist for Screening Ethical Investments

Ethical investing works best when you have a written screen you can use again and again: define your criteria, gather evidence, apply pass-fail rules, test for greenwashing, and review holdings on a regular basis.

Here’s the checklist in compact form.

Use this checklist before committing capital.

Once you’ve built the checklist, use it at every review. That’s what makes the process hold up over time. For Singapore investors, it’s worth reading MAS-aligned ESG disclosures closely before putting money to work. As ESG data and MAS disclosures get better, and as your own values become clearer, refine the inputs, not the process.

Used the same way each time, this five-step screen helps keep decisions disciplined. A documented process, reviewed often and applied without shortcuts, can help Singapore investors build portfolios that reflect their values, not just their labels.

FAQs

How do I set my own ethical rules?

Start by defining what “ethical” means to you. Be clear about the sectors, business models, or themes you want to include, and just as clear about what you want to avoid. That could mean ruling out certain industries, or leaning towards firms that match your own values. The key is to turn those views into simple screening filters you can use the same way each time and save, so you can track results over time instead of making ad hoc calls.

Then test those filters against actual company data. Go through company information in a steady, repeatable way, including governance signs in annual reports and SGX announcements. After that, look at the numbers: liquidity, solvency, profitability, and cash flow. This helps you see whether your rules still make sense when they meet the facts on the ground.

What if ESG data is missing or unclear?

If ESG data is missing or unclear, you need to handle that gap in a way that fits the type of data you’re working with.

For quarterly data, forward-filling within sensible limits is a common fix. For high-frequency data, you may need interpolation or clear flags that mark missing entries.

How often should I review ethical holdings?

Review your ethical holdings on a regular basis so they stay in line with your investment plan and what’s happening in the market.

How often you do this depends on your approach. Some investors check monthly, others prefer quarterly or once a year.

That regular check-in helps you:

• manage risk
• keep your target allocation on track
• monitor performance
• adjust your holdings when new information comes in