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This page is intended for US prospects, clients and investors only and includes information about the capabilities, staffing and history of Robeco Institutional Asset Management US, Inc. (RIAM US) and its participating affiliates, which may include information on strategies not available in the US. US Securities and Exchange Commission (SEC) regulations are applicable only to clients, prospects and investors of RIAM US. Robeco BV, Robeco HK and Robeco SH are considered a “participating affiliate” of RIAM US and some of their employees are “associated persons” of RIAM US as per relevant SEC no-action guidance. Employees identified as access persons or associated persons of RIAM US perform activities directly or indirectly related to the investment advisory services provided by RIAM US. In those situations, these individuals are deemed to be acting on behalf of RIAM, a US SEC registered investment adviser. RIAM US’s SEC registration should not be viewed as an endorsement or approval of RIAM US by the SEC. RIAM US maintains its offices at 230 Park Avenue, New York, NY 10169.
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Sustainable Investing
Negative screening
Negative screening is the process of finding companies that score poorly on environmental, social and governance (ESG) factors relative to their peers. These companies can then be avoided when constructing a portfolio. It is therefore the flipside of positive screening, which seeks to identify the best performers for inclusion in a portfolio, using what may be the same set of qualitative measures.
Negative screening in ESG: identifying underperforming stocks
Both negative and positive screening are always done in peer comparison. Companies are judged against others in their peer group according to their ESG characteristics. For most investors, negative screening means the avoidance of the lowest-scoring part of an SI metric, usually the bottom 20% stocks ranked on the ESG score.
Negative screening therefore aims to wheedle out the wheat from the chaff when choosing stocks for a portfolio. Typical factors that the screening process looks out for include a poor environmental or waste management record, including unacceptably high carbon footprints; poor labor relations, particularly linked to the non-payment of living wages; and poor governance issues such as a lack of diversity on boards, or overly controlling private shareholders. All are taken into consideration when making the final peer group comparison.
