For the past several years, in an attempt to uphold their sustainability chops, many investors turned to a strategy called exclusion screening, where they avoided stocks of companies that do not fit into some environmental, social and governance (ESG) criteria. By wielding this “stick”, so the thinking goes, companies will be rewarded for showing that they have achieved certain ESG standards.
As a result, so-called “brown” companies — which are in the midst of their transformation — were cut off from the funding, thereby hampering a bigger number of companies from turning “green”.
But global asset manager abrdn — previously known as Aberdeen Standard Investments — believes that investing in companies that are transitioning from “brown” to “green” would bring about a much bigger change.
