Best-in-class (or positive screening)
Definition
Best-in-class or positive screening involves selecting, for each investment sector, the assets with the most positive scores on relevant environmental, social, and governance ESG criteria. An aggregate ESG score may be determined based on combinations of single factors by a third party. External ESG scores can be used to obtain a proxy for a company’s ESG performance through a standardized system and, as such, can prove useful for asset managers or asset owners with a limited understanding of how to design their own selection criteria based on various sustainability factors. Positive screening is based on more objective criteria than negative screening, since there are now rating agencies producing ESG scores based on an aggregation of factors. However, there is still a great lack of convergence between the ratings of the various rating agencies.
About EDHEC
Operating from campuses in Lille, Nice, Paris, London and Singapore, EDHEC is one of the world’s top 15 business schools. Fully international and directly connected to the business world, EDHEC commands a strong reputation for research excellence and the ability to train entrepreneurs and managers capable of breaking new ground. EDHEC functions as a genuine laboratory of ideas and produces innovative solutions valued by businesses. The School’s teaching is inspired by its research work and a focus on “learning by doing”, all with the aim of equipping people with the skills to succeed in business.
