Which screening process would likely involve evaluating companies for their positive impact?

The screening process that focuses on evaluating companies for their positive impact is known as positive screening. This approach is often utilized by investors who are interested in socially responsible investing (SRI) or environmental, social, and governance (ESG) criteria. Positive screening involves identifying and selecting companies that actively contribute to positive outcomes—such as sustainable practices, community engagement, or robust governance policies.

Investors using this method typically look for firms that not only meet financial performance metrics but also demonstrate a commitment to making a beneficial impact on society or the environment. This could include companies involved in renewable energy, social equity, or sustainable agriculture, among others. By emphasizing positive characteristics, investors align their portfolios with their values and support businesses making a constructive difference.

Other types of screening, such as negative screening, focus on excluding companies based on harmful practices rather than identifying those with positive contributions. Passive investing primarily entails tracking an index without taking specific social or ethical criteria into account, and value investing centers on finding undervalued stocks based on their intrinsic value, without necessarily considering their social impact.