Flags highlight where issuers' revenue-generating activities and conduct are supporting the sustainability transition (beneficial), creating negative social or environmental impacts (controversial), or where your investments are in activities subject to significant stakeholder debate such as Nuclear energy (contested)
More than ever, we have clear definitions of sustainability and global consensus on the future we are working towards. This includes global goals such as the Paris Agreement or the Sustainable Development Goals - which require 2.5 trillion USD in additional investment annually - to regulations defining what constitutes a sustainable economic activity (e.g. EU Taxonomy) and the impacts companies and investors have to measure and disclose (EU Sustainable Finance Disclosure Regulation). These give us clear frameworks for understanding which activities are contributing to or undermining sustainable outcomes - such as renewable energy (beneficial) or fossil fuels (controversial).
We also know what we should expect of companies and governments in terms of conduct: policies and processes to protect natural capital, workers, and societies, and science-based targets for improvement (beneficial), while avoiding polluting or unethical activities like crime and corruption (controversial). Matter also flags where your investments are exposed to activities for which there are contested or highly debated views, such as Nuclear Energy or Cannabis.