ESG investing: should you be negative or positive?
With concerns around climate change and human welfare growing, investors are increasingly looking for investment options that do not harm society or the planet. These investments are generally referred to as Environmental, Social & Governance (ESG). The managers of such investment funds seek to meet an investor's desire to help by typically ensuring that they do not invest in certain industries. The likes of munitions, fossil fuels, and gambling are typically excluded. This process is known as "negative screening". So it excludes those investments that fail to have the correct criteria. However commentators and investors are increasingly querying this approach. For example, what about the impact of supply chains? Should you not also exclude a firm or even an industry that relies on the use of an excluded industry's product? If the manufacturing of a device entails a huge amount of oil to be burnt, then shouldn't the firm producing the device also be excl