Sustainable investing is about ensuring our investment strategies align with our broader values.
Positive Screening is simply the inverse of negative screening: investing in companies producing desired goods and services and/or working to promote societal well being. This approach is usually “company-based,” meaning that investors decide to invest in a company based on its attributes and practices, and so commonly involves past association.
The use of Environmental, Social, and Governance (ESG) Criteria, a form of positive screening, is one of the fastest growing and widely researched new strategies for engaging in sustainable investing. It entails selectively investing in companies meeting determined environmental and sustainability benchmarks (emissions targets, waste minimization, etc.), social (community involvement, employee relations, etc.) and governance criteria (shareholder rights, transparency, etc.). An institution establishes these criteria before investing and then seeks out companies that meet them to invest in. These criteria are usually taken to represent the values or goals of the university or organization responsible for the investment
Negative Screening is the avoidance of investment in companies producing or purchasing undesired products, such as firearms or fossil fuels, or engaging in objectionable behavior (e.g. tax evasion). This is probably the most familiar investment strategy, and is most effectively used to draw resolute lines about what an institution defines as unacceptable social behavior. In colleges and universities, negative screening often manifests in calls for divestment in fossil fuels, as it has at Western
Impact Investing intends to promote given outcomes, such as innovation in green technologies, in addition to favorable returns. Here, the emphasis is not on companies or attributes of those companies but goals, projects, and outcomes. Other uses of impact investing include promoting community economic development, boosting specific technological industries, and supporting educational programs.