Responsible investing: Short selling increases impact

An active role to play

There are three main approaches to integrating sustainability in a portfolio: exclusion, scoring and thematic.

Exclusion is currently the predominant framework used in the industry and entails excluding companies involved in certain activities, e.g., alcohol, tobacco, predatory lending. Scoring is a more sophisticated approach, which, as its name suggests, scores companies on certain attributes grouped under three main factors: environmental, social and governance (E, S and G). Finally, thematic is regarded as an evolution of the first two, using an approach that focuses on one or more areas where societal or environmental needs are spawning commercial growth opportunities. Investor warning for a...