What is Positive Screening in Impact Investing?
Positive screening is a crucial strategy in impact investing, where investors actively seek out and select companies, projects, or funds that demonstrate a positive social or environmental impact. Unlike negative screening, which excludes sectors or businesses deemed undesirable (such as fossil fuels or tobacco), positive screening focuses on identifying and promoting enterprises that contribute positively to society and the planet.
This approach aligns the investment process with the investor's ethical values and goals, ensuring that capital is directed toward organizations that are making measurable contributions to environmental sustainability, social equity, and community development. Positive screening can involve evaluating companies based on their innovative practices, sustainability initiatives, and overall commitment to responsible governance.
Investors employing positive screening may look for businesses involved in renewable energy, healthcare improvements, education access, and affordable housing solutions. By utilizing this strategy, impact investors not only seek financial returns but also aim to drive change, foster sustainable development, and address pressing global challenges.
In essence, positive screening represents a proactive approach in the realm of impact investing, focusing on enabling and enhancing positive outcomes while supporting growth in sectors that offer social and environmental benefits.