What is positive screening?

What is positive screening?

• A. A method to exclude firms with governance risks
• B. A strategy to invest equally across all sectors
• C. A strategy that ignores ESG data
• D. A strategy to prioritize or actively choose firms based on sustainability criteria; e.g., best-in-class screening using ESG ratings

Answer: (D)

Positive screening means actively selecting investments based on favorable sustainability criteria. Rather than just excluding certain firms or ignoring ESG data, this approach seeks out leaders in environmental, social, and governance performance. A common form is best-in-class screening, where you choose top-rated companies within each sector according to ESG ratings. This focuses on prioritizing those with stronger sustainability practices, aiming to align investments with higher ESG standards and potentially complementary financial performance.

Positive screening means actively selecting investments based on favorable sustainability criteria. Rather than just excluding certain firms or ignoring ESG data, this approach seeks out leaders in environmental, social, and governance performance. A common form is best-in-class screening, where you choose top-rated companies within each sector according to ESG ratings. This focuses on prioritizing those with stronger sustainability practices, aiming to align investments with higher ESG standards and potentially complementary financial performance.