Negative screening and sustainable portfolio diversification

Iván Arribas, María Dolores Espinós-Vañó (), Fernando Garcia Garcia and Rima Tamošiūnienė ()
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María Dolores Espinós-Vañó: Polytechnic University of Valencia, Spain
Rima Tamošiūnienė: Vilnius Gediminas Technical University (VILNIUS TECH), Lithuania

Entrepreneurship and Sustainability Issues, 2019, vol. 6, issue 4, 1566-1586

Abstract: A critical issue for socially responsible investors is the selection of the potential companies to invest in. For retail investors, the easiest and more intuitive option is to apply a negative screening approach to avoid investing in companies with bad reputation. In this line, companies involved in scandals regarding irresponsible activities which have become notorious in the mass media will be excluded from the potential companies. Implementing this process in a consistent and objectivity way is not an easy task, especially with worldwide portfolios. Nevertheless, there already exist complex databases which offer sensitive information to investors. This paper describes one of these databases. Furthermore, the problems of implementing such a negative screening methodology are presented, which are mainly related with the proper diversification of the resulting investment portfolios.

Keywords: negative screening; bad reputation; negative media stories; ESG; controversies; sustainability; social corporate responsibility (search for similar items in EconPapers)
JEL-codes: G15 Q56 (search for similar items in EconPapers)
Date: 2019
References: View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:ssi:jouesi:v:6:y:2019:i:4:p:1566-1586

DOI: 10.9770/jesi.2019.6.4(2)

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