Social Harm Research Methodology

13th Oct. 2023

The Social Harm category encompasses a range of issues that significantly impact society's well-being and individuals' lives. At Mindful Money, we identify companies involved in businesses related to tobacco, gambling, alcohol, adult entertainment, and predatory lending. Our approach considers various dimensions, allowing investors to make informed choices that align with their ethical values and societal responsibility.

What is social harm and why should investors care?

Industries associated with social harm pose significant risks to people, including addiction, mental and physical health issues, financial distress, and adverse social consequences. These risks not only affect the well-being of individuals but also families, communities, and society at large. Companies operating within these sectors often profit from such activities, sparking ethical concerns about businesses perpetuating harm. Consequently, investments in these industries may inadvertently support practices that can have detrimental effects across varying scales, such as:

  • Tobacco: Tobacco companies produce products linked to addiction, chronic health problems, and premature death.
  • Gambling: The gambling industry can cultivate addiction, financial distress, and negative social consequences for individuals and their families.
  • Alcohol: Alcohol consumption can contribute to health issues, addiction, and social problems, including accidents and violence.
  • Adult Entertainment: Ethical concerns surround the portrayal of sexuality in the adult entertainment industry and its potential effects on individuals and relationships.
  • Predatory Lending: Predatory lending practices, such as high-interest payday loans, can ensnare vulnerable individuals in cycles of debt and financial instability.

We believe in empowering investors to contribute to a healthier, more responsible, and socially conscious world. Investors should care about their investments in companies associated with social harm for several reasons. Firstly, there's an ethical responsibility to align investments with personal values and consider the broader impact on individuals and communities. In essence, investing in socially responsible alternatives is vital for developing a healthier and more responsible society. 

Secondly, companies in these sectors may encounter reputational risks and heightened scrutiny. Regulatory risk remains a significant concern as governments worldwide enact stricter regulations in response to public health and ethical concerns. Additionally, these industries face financial uncertainties due to evolving consumer preferences, potential legal liabilities, and changing social attitudes. As an example, many governments and public health organisations have implemented measures to reduce smoking rates and discourage tobacco use due to public health concerns. Therefore, deciding to invest responsibly socially reflects a commitment to both ethical and sound financial practices.

You can find out more about funds that don't invest in companies associated with social harm here.

How does Mindful Money find and categorise these companies?

Mindful Money aims to make consistent decisions and uses a range of credible sources and ongoing engagement with recent research to maintain a comprehensive list of companies engaged in the production or retail of products linked to social harm. Mostly, we use a structured framework supported by data from Sustainalytics, a global screening service (covering 30,000 global companies), to collate and understand to what extent companies produce or retail tobacco, gambling products/services, alcohol, pornography, or predatory loans. We also review decisions from major global responsible investors such as the NZ Super Fund and the Norwegian Pension Fund (NBIM), and material produced from credible NGOs.

In our definition of social harm, we categorise companies into sub-categories based on four critical issues: Tobacco, Gambling, Alcohol, Adult Entertainment and Predatory Lending. If a company's practices align with more than one of these issues, they may be included in both sub-categories.

Further information on Mindful Money's overall methodology can be found here.


Within our definition of tobacco, we include companies engaged in both the production and retail aspects of tobacco, as well as those offering tobacco-related products and services. These companies span a wide range, from major tobacco manufacturers which produce cigarettes and smokeless tobacco, to retail giants such as convenience stores and gas stations that sell tobacco products to consumers (given they meet the materiality thresholds below). Additionally, we consider companies involved in the development and marketing of e-cigarettes, vaping devices, and other smoking alternatives as part of the tobacco-related category. Tobacco-related products/services also refers to specialised packaging materials, specialised equipment for production and raw materials for use in tobacco products.

Our materiality definition includes:

  • 0% revenue threshold for the production of tobacco
  • >10% revenue threshold for the production of tobacco-related products/services
  • >10% revenue threshold for retail sales/distribution of tobacco or tobacco-related products/services

    Company profile: British American Tobacco (BAT) is one of the world’s largest tobacco companies, operating in more than 200 companies. The company manufactures a wide range of tobacco products, including cigarettes, cigars, and smokeless tobacco. Like many large corporations, BAT has been known to engage in lobbying activities, to influence governments and regulatory agencies that create less restrictive regulations related to the sale of tobacco products. Some sources report the company spends upwards of US$ 20 million on lobbying per annum. BAT also engages extensively in their own marketing and advertising campaigns to promote its brands, despite the known health and societal concerns related to its products.


Within our definition of gambling, we include companies engaged in the manufacture or retail of gambling specialised equipment, gambling supporting products and services, or gambling operations. These range from companies that produce slot machines, lottery systems, and related technology used in casinos and gaming establishments worldwide, to companies engaged in actual gambling operations, such as casinos, online betting platforms, and gaming establishments. Additionally, our definition extends to businesses that offer gambling-supporting products and services, such as payment processing solutions for online betting platforms or marketing services for casinos. 

Our materiality definition includes:

  • >10% revenue threshold for gambling specialised equipment and/or gambling supporting products/services
  • >10% revenue threshold for gambling operations

    Company profile: SkyCity Entertainment Group Ltd. is a New Zealand-based company primarily known for its casinos and entertainment complexes. These casinos offer a range of gaming options, including slot machines, table games (such as blackjack, roulette, and poker), and other forms of gambling entertainment. The company has also ventured into the online gaming and betting industry through its online casino platform, which allows customers to play casino games remotely. In 2023, SkyCity faced regulatory action with a risk of license suspension due to alleged violations of host responsibility rules, where they failed to properly detect instances of continuous play.


Within our definition of alcohol, we include companies engaged in both the production and retail aspects of alcoholic beverages, as well as those offering alcohol-related products and services. This category includes major breweries and distilleries which produce a wide range of alcoholic beverages, from beer and wine to spirits and liquors, to businesses such as bars and liquor stores that sell alcoholic beverages to consumers (given they meet the materiality threshold below). Additionally, our definition extends to companies providing services such as alcohol distribution, marketing, or related accessories and products.

Our materiality definition includes:

  • >10% revenue threshold for production of alcoholic beverages and/or alcohol related products/services
  • >25% revenue threshold for retail sales of alcoholic beverages

Company profile: Heineken N.V. is a Dutch multinational brewing company and is the world's second-largest brewer selling 257 million hectolitres of beer in 2022. The company invests heavily in marketing and sponsorship deals, including partnerships with sports events, music festivals, and other cultural events. As a producer of alcoholic beverages, Heineken has been scrutinized for its marketing practices, especially regarding the impact of alcohol on public health and issues related to underage drinking.

Adult Entertainment

Within our definition of adult entertainment, we include companies involved in the production or distribution of adult entertainment. This includes producers of adult movies, cinemas that show adult movies, adult entertainment magazines, and the broadcasting of adult entertainment.

Adult Entertainment can be considered controversial as it is claimed that it may undermine faith and family values. Other concerns are that the materials show the subordination of people, especially women.

Our materiality definition includes:

  • 0% revenue threshold for production of adult entertainment
  • >10% revenue threshold for distribution of adult entertainment

Company profile: Caesars Entertainment, Inc. engages in the management of casinos and resorts under the Caesars, Harrah's, Horseshoe, and Eldorado brands, among others. The company also includes in its entertainment offer, among events for any audience, shows only for adults, such as ' X Burlesque ' or ‘X Country’.

Predatory Lending

Predatory lending refers to any unfair or unethical practice that benefits the lender and makes it difficult for a borrower to repay debt. We define a company as having involvement in predatory lending if the company derives revenue from exploitive lending practices. By offering loans with exorbitant interest rates, hidden fees, and deceptive terms, predatory lenders often target those in desperate need of funds, trapping them in cycles of debt they cannot escape.

Our definition of predatory lending includes companies whose core business or primary source of revenue is based on predatory lending activities.

Company profile: EZCORP, Inc. operates pawn stores and re-sells commodities, which were initially brought as collaterals. Brand names of the company include EZPAWN or Value Pawn & Jewelry (United States), Empeño Fácil (Mexico) and GuatePrenda (Guatemala), among others. These activities are commonly seen as predatory lending practices and represent most of the company's business, given the company derives revenues from pawn service charges and merchandise primarily consisting of second-hand collateral forfeited from its pawn lending.