Ethical stock indices, i.e. Socially Responsible Investment (SRI) indices, have been developing all over the world for several years to provide a benchmark for those who want to invest on the Stock Market according to the principles of corporate social and environmental responsibility. SRIs are an alternative measure of the return that ethical finance can offer compared with traditional finance.

Indeed, responsible investment means that in addition to the typical financial objectives, i.e. optimisation of the risk-return ratio over a given time horizon, consideration is also given to environmental, social or governance (ESG) factors.

Responsible investment is typically undertaken via screening, which consists of selecting the equities to include in a financial portfolio by analysing the conduct of issuer companies according to ESG criteria. Selection is made using negative (exclusion) and/or positive (inclusion) criteria. A negative criterion is understood to mean a condition or series of conditions that, were they to occur, would lead to the exclusion of the company in question; it is therefore a purchase restriction on the manager, which undertakes not to invest in certain companies or certain sectors that are at odds with ESG considerations, e.g. the manufacture and sale of arms, or the production and distribution of tobacco. Conversely, positive criteria are applied when the selection of equities includes companies that have a proven track record of socially responsible behaviour, and comply with codes of ethical conduct and corporate governance.