Sustainable Investing Glossary

Negative screening

Excluding companies that engage in activities that are deemed objectionable.

Negative screening means excluding companies that do not comply with specific, pre-set social or environmental criteria. Examples are mutual funds that exclude companies involved in the production of alcohol, tobacco or gambling products, also referred to as ‘sin stocks’. Other negative screens frequently applied are on weapons manufacturers, nuclear power producers or companies that use child labor.

Negative screening can be a first step for investors to invest sustainably. The downside is that it has no net impact, as there is always someone that is willing to buy the relevant shares instead.