Two filters, applied in order.
Business activity. Companies earning meaningful revenue from riba-based finance, alcohol, gambling, pork, conventional insurance, adult content or weapons are excluded outright.
Financial ratios. What survives the first filter is then tested on debt, interest-bearing assets and non-compliant income as a proportion of market capitalisation, against recognised standards.
Screening is not a one-time event. Holdings are re-screened periodically, and anything that fails is divested. Small amounts of incidental non-compliant income are purified and donated rather than passed to you.
All of this is reviewed by an independent Shariah advisory board, not decided internally.