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Negative screening and sustainable portfolio diversification

Author

Listed:
  • Iván Arribas

    (University of Valencia, Spain)

  • María Dolores Espinós-Vañó

    (Polytechnic University of Valencia, Spain)

  • Fernando García

    (Polytechnic University of Valencia, Spain)

  • Rima Tamošiūnienė

    (Vilnius Gediminas Technical University (VILNIUS TECH), Lithuania)

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.

Suggested Citation

  • Iván Arribas & María Dolores Espinós-Vañó & Fernando García & Rima Tamošiūnienė, 2019. "Negative screening and sustainable portfolio diversification," Entrepreneurship and Sustainability Issues, VsI Entrepreneurship and Sustainability Center, vol. 6(4), pages 1566-1586, June.
    • Handle: RePEc:ssi:jouesi:v:6:y:2019:i:4:p:1566-1586
    DOI: 10.9770/jesi.2019.6.4(2)
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    Cited by:

    1. Agnieszka Majewska & Patrycja Bełtowska, 2023. "Socially responsible investing (SRI) as a factor of competitiveness and sustainable development of organizations in young consumers' opinion," Entrepreneurship and Sustainability Issues, VsI Entrepreneurship and Sustainability Center, vol. 10(4), pages 245-262, June.
    2. O.Yu. Voronkova & E.G. Perepechkina & R.A. Shichiyakh & V.I. Kuts & P.A. Sungurov & G.V. Glazkova, 2019. "Ecological and Economic Potential and Prospects for Organic Production in the Regions of Russia," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(Special 1), pages 583-594.
    3. Fernando Tavares & Eulália Santos & Vasco Tavares & Vanessa Ratten, 2020. "The Perception and Knowledge of Financial Risk of the Portuguese," Sustainability, MDPI, vol. 12(19), pages 1-12, October.
    4. Fernando Gómez-Bezares & Wojciech Przychodzen & Justyna Przychodzen, 2019. "Corporate Sustainability and CEO–Employee Pay Gap—Buster or Booster?," Sustainability, MDPI, vol. 11(21), pages 1-15, October.
    5. Felipe Arias Fogliano de Souza Cunha & Erick Meira & Renato J. Orsato, 2021. "Sustainable finance and investment: Review and research agenda," Business Strategy and the Environment, Wiley Blackwell, vol. 30(8), pages 3821-3838, December.
    6. Dormann, Katharina, 2023. "Green Funds and Environmental Disclosure Quality," Junior Management Science (JUMS), Junior Management Science e. V., vol. 8(3), pages 772-797.
    7. Fernando García & Jairo González-Bueno & Francisco Guijarro & Javier Oliver, 2020. "Forecasting the Environmental, Social, and Governance Rating of Firms by Using Corporate Financial Performance Variables: A Rough Set Approach," Sustainability, MDPI, vol. 12(8), pages 1-18, April.
    8. Serhiy Lyeonov & Tetyana Pimonenko & Yuriy Bilan & Dalia Štreimikienė & Grzegorz Mentel, 2019. "Assessment of Green Investments’ Impact on Sustainable Development: Linking Gross Domestic Product Per Capita, Greenhouse Gas Emissions and Renewable Energy," Energies, MDPI, vol. 12(20), pages 1-12, October.

    More about this item

    Keywords

    negative screening; bad reputation; negative media stories; ESG; controversies; sustainability; social corporate responsibility;
    All these keywords.

    JEL classification:

    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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