What distinguishes exclusionary screening from inclusivity in investment?

Exclusionary screening is a strategy that focuses on removing specific investments from a portfolio based on negative criteria, typically related to ethical, social, or environmental standards. This could include avoiding companies involved in activities such as fossil fuels, tobacco production, or human rights violations. By establishing these negative criteria, investors can align their portfolios with their values or a specific ethical framework, thereby ensuring that they do not inadvertently support industries or practices that are harmful to society or the environment.

In contrast, inclusivity in investment refers to an approach that actively seeks to include companies that are making positive contributions to environmental, societal, and governance aspects. This strategy is about recognizing and promoting companies that demonstrate sustainable practices or that are contributing to social good, rather than merely avoiding those that perform poorly on ESG criteria.

The other options either inaccurately characterize the nature of exclusionary screening and inclusivity or misrepresent the principles underlying responsible investing practices. Therefore, understanding that exclusionary screening is defined by the removal based on negative criteria clarifies its distinction from inclusive investment strategies.