Sustainable companies

Print  Save to PDF  Share

Companies that score highly on ESG factors in their business operations. Screening mostly takes two forms – negative and positive – backed by research and access to reliable data. Negative screening essentially means excluding those companies that do not meet pre-determined ESG standards and typically includes makers of controversial weapons, companies engaged in human rights abuses, or corporate governance failures such as corruption. Positive screening means examining the ESG credentials of the companies that remain in the investment universe after the exclusions have been carried out. Different companies will get varying scores according to their business, and the E, S and G will have differing levels of importance according to the sector. For example, a mining company may score poorly on environmental management and social factors, but be superbly managed and score highly for governance. Conversely, banks may score highly for environmental and social factors, but poorly for governance due to their excessive risk-taking during the financial crisis.

Links

The 100 most sustainable corporations of 2022