Some ESG Investment Strategies to Consider

​ESG investing is an investment method that focuses on improved environmental, social, and governance (ESG) outcomes. It is a way of investing sustainably, considering how the investment decisions will affect the well-being of the environment, human beings, and the economy.

One key strategy for ESG investing is negative screening, also known as exclusionary screening. This involves excluding certain companies or sectors from a portfolio by determining the exclusion criteria ahead of time, depending on a specific goal. For instance, if the objective of the investment is to minimize the impact of climate change, it may be worthwhile to remove all fossil fuel companies from the portfolio.

Another effective strategy for ESG investing is positive screening. This strategy, also known as best-in-class screening, involves selecting the best-performing companies from a given industry using certain characteristics as criteria. Unlike negative screening, which looks for exclusion criteria, positive screening looks for criteria and performance measures for including companies in the portfolio.

There is also the portfolio tilt method. As the name suggests, this ESG investment strategy involves adjusting the percentage of ESG investments in a portfolio. The idea is to have more ESG investments than non-ESG investments in the portfolio. This portfolio tilt strategy is a relatively low-risk investment strategy.

Graham R Taylor

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