Positive Screening vs. Negative Screening: What are the Differences? | ESG Explainer
Overview
How do positive and negative screening methods differ in their approach to sustainable and ESG investing? Watch this video to understand how asset managers use these strategies.
What is positive screening vs negative screening?
When it comes to ESG investing, there are two ways to screen a potential investment: positive or negative screening.
As the name implies, positive screening means actively seeking investments with specific ethical or sustainability criteria.
It is a search for companies that align with investor preferences regarding society and the environment.
This can be based on many different criteria, including clean energy, fair labor practices, diversity, and community engagement.
On the other side of the coin, is negative screening.
This is when investors avoid investing in companies that don’t meet certain ethical or sustainability criteria.
Companies that don’t align with an investor’s preferences, like engaging with those in the tobacco or arms industries.
Ultimately, positive and negative screening go hand in hand to allow investors to make ethical and sustainable investments and build a portfolio that matches their criteria.
Want to know more? Check out the other videos in the series:
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