Green Investment Management Terminology Jargon Buster

What is negative screening? 

The key terms in this group are: 

• Ethical investing
• Values-based investing
• Religious investing
• Shariah investing
• Responsible investing

Negative screening is akin to if you take a traditional index, such as the S&P 500 or the FTSE100 and remove some big offenders. The idea is to filter or screen out the really bad stuff and keep the rest. Typically the things excluded would be weapons, gambling, pornography, or alcohol. Increasingly, fossil fuel companies and brands which engage in animal cruelty are also getting screened out.

If a company gets more than 15% of its revenue from these forbidden dealings, it’s kicked off the fund, usually called an “acceptance level” or “materiality threshold”. 

What is positive screening? 

The key terms in this group are: 

• ESG
• Sustainable investing
• Active ESG
• Best-in-class investments 

This is a step further from negative screening, but is a huge group and it’s full of exceptions and controversies - and also where you would find the most greenwashing. 

ESG falls into the green category because it positively seeks out environmental, social and governance qualities, which is a step beyond negative screening. But it is still not perfect.

What are impact and activism? 

The key terms in this group are: 

• Impact investing
• Shareholder activism

These are the companies which truly aim to make the world a better place and are looking to change the status quo, usually for environmental or social good. Many people expect all sustainable and ESG investments to be of this quality, they are actually few and far between.