How to Check If a Portfolio Is Ethical: The Independent Verification Guide
You type your holdings into a portfolio screener. It gives you a score. Green means good. But where did that score come from?
In most cases, the answer is the companies themselves. The sustainability reports they wrote. The questionnaires they filled out. The disclosures they chose to make. You are checking whether a company is ethical using data the company produced about itself.
That is not verification. That is repetition.
This guide shows you how to check a portfolio using sources that companies do not control: court filings, regulatory actions, investigative journalism, and NGO field research. The same sources a due diligence team would use. The same sources Mashinii's scoring methodology is built on.
Why Self-Reported ESG Data Is Not Verification
Every major ESG data provider collects the bulk of its information from corporate disclosures. Companies submit sustainability reports, respond to questionnaires, and publish targets. The data providers then score them.
The problem is structural:
- Companies choose what to disclose. A mining company can publish a 200-page sustainability report that omits every pending environmental lawsuit. Nothing forces completeness.
- Disclosure is not evidence. Stating "we are committed to reducing emissions by 50% by 2030" is a press release, not a verified fact. Stating "our Scope 1 emissions fell 12% year-over-year" requires independent audit to confirm.
- Ratings disagree dramatically. MIT and University of Zurich research found that ESG rating correlations between providers can be as low as 0.4. If ratings were measuring something objective, they would converge. They do not.
This does not mean all corporate reporting is false. It means corporate reporting alone is insufficient for verification. You need a second source — one the company did not write.
What Independent Sources Actually Exist
Independent data comes from institutions whose job is to investigate, regulate, or expose — not to cooperate with the companies they cover.
Court filings and legal records. Lawsuits, class actions, settlements, and judgments. These are sworn statements, not voluntary disclosures. When a company pays $500 million to settle an environmental contamination claim, that is a data point no sustainability report will highlight.
Regulatory actions. Fines, sanctions, enforcement actions, and consent decrees from bodies like the SEC, FCA, EPA, OSHA, and their international equivalents. These are public record.
Investigative journalism. Reporting from outlets like Reuters, the Guardian, the Financial Times, and specialist publications. Investigations into labour conditions, environmental violations, and corporate misconduct. Peer-reviewed by editorial standards.
NGO and watchdog reports. Research from Amnesty International, Human Rights Watch, Transparency International, Global Witness, and sector-specific organisations. Often based on field research that no commercial data provider conducts.
Government and parliamentary inquiries. Select committee reports, public hearings, and official investigations. The UK Parliament's inquiry into fast fashion labour practices, for example, produced evidence that no corporate disclosure captured.
These sources share a common trait: the company being assessed did not write them, cannot edit them, and often fought to suppress them.
Step-by-Step: How to Check Your Portfolio Independently
Step 1: List Your Actual Holdings
Not the fund name — the companies inside it. If you hold an S&P 500 tracker, you hold 500 companies. If you hold a "sustainable" ETF, you hold whatever the fund manager selected.
Get the full holdings list from your fund provider's website. Most publish quarterly factsheets with top holdings, and many publish complete lists.
Step 2: Identify Your Highest-Conviction Concerns
You cannot manually research 500 companies across every ethical dimension. Start with what matters most to you:
- Environmental impact and emissions
- Labour rights and supply chain conditions
- Weapons and defence involvement
- Data privacy and surveillance
- Corporate governance and corruption
- Animal welfare
- Community impact
Pick 2-3 dimensions. Focus your research there first.
Step 3: Run an Independent Audit
This is where manual research becomes impractical at scale — and where tools built on independent data become necessary.
Mashinii's Portfolio Audit scores every holding across 11 ethical dimensions using exclusively independent sources. Each score links to the specific court filings, regulatory actions, or investigations that generated it. You see the evidence, not just a number.
Upload your holdings or enter your fund, and the audit returns a dimension-by-dimension breakdown for every company in your portfolio.
Step 4: Read What the Scores Actually Mean
A score is a summary. The evidence behind it is what matters.
Each dimension in Mashinii's methodology measures something specific:
| Dimension | What It Measures |
|---|---|
| Planet-Friendly Business | Environmental violations, emissions record, regulatory penalties |
| Fair Pay & Worker Respect | Labour disputes, safety violations, wage theft, union suppression |
| No War, No Weapons | Defence contracts, weapons manufacturing, arms exports |
| Safe & Smart Tech | Data breaches, surveillance, privacy violations |
| Honest & Fair Business | Fraud, corruption, regulatory sanctions, governance failures |
| Better Health for All | Product safety, public health impact, pharmaceutical practices |
| Fair Trade & Ethical Sourcing | Supply chain exploitation, sourcing violations |
| Zero Waste & Sustainable Products | Waste practices, product lifecycle, circular economy |
| Respect for Cultures & Communities | Community displacement, indigenous rights, cultural impact |
| Kind to Animals | Animal testing, wildlife harm, biodiversity impact |
| Fair Money & Economic Opportunity | Financial inclusion, predatory practices, economic impact |
Scores range from -100 to +100. Negative scores are backed by adverse findings. Positive scores reflect a clean independent record on that dimension.
Step 5: Decide What to Do With the Results
Flagged companies fall into three categories:
Clear conflicts. The company scores negatively on a dimension that is a hard line for you. A pacifist holding a company that scored -60 on No War, No Weapons has a clear conflict. Action: sell or switch to a fund that excludes it.
Trade-offs. A company scores well on some dimensions and poorly on others. Meta scored +40 on Planet-Friendly Business but -50 on Safe & Smart Tech and -70 on Honest & Fair Business. This requires a judgement call — which dimensions matter more to you?
Concentrated exposure. Multiple holdings in your portfolio score negatively on the same dimension. If 15 of your top 20 holdings score below zero on worker respect, you do not have one problematic company — you have a portfolio-level problem. Consider switching to a fund with different screening criteria, or explore direct indexing options.
What About "Ethical" and "Sustainable" Fund Labels?
A fund labelled "ESG" or "sustainable" has been screened — but screened using what data? By what criteria? With what exclusions?
According to research published by Urgewald, approximately one-third of ESG-labelled funds invest in companies expanding fossil fuel production. Separate reporting by TIME found that a majority of ESG-rated funds failed Paris Agreement alignment tests. The labels do not guarantee what most investors assume they guarantee.
This is not a reason to avoid labelled funds entirely. It is a reason to verify independently what is inside them. The same 5-step process above applies to "sustainable" funds — arguably more so, because the label creates an expectation that may not match reality.
Read our detailed analysis of what is actually inside popular sustainable funds.
The Difference Between Screening and Verification
Whether you call it ethical investing, ESG screening, socially responsible investing (SRI), sustainable investing, or impact investing — the underlying question is the same: does this portfolio align with the investor's values? The terminology varies, but the verification problem does not.
Traditional ESG screening asks: "Did this company report positive ESG metrics?"
Independent verification asks: "What did courts, regulators, journalists, and watchdogs find about this company?"
These are different questions. They produce different answers. When they agree, you have confidence. When they disagree — and they frequently do — the independent evidence tells you what the self-report omitted.
Verification is harder. It requires adversarial data sources, cross-referencing, and a willingness to report what companies would rather you did not see. But it is the only way to answer the question investors are actually asking: is my money funding something I would object to if I knew about it?
Check Your Portfolio Now
Mashinii scores companies across 11 ethical dimensions using court filings, regulatory actions, investigative journalism, and NGO reports. No corporate self-assessments. Every score links to its source.