We all have lines we won't cross with our money. For some, it's cashing dividends from companies driving climate change. For others, it's profiting from tobacco, weapons, or gambling. Negative screening is how you draw those lines in a portfolio. It removes securities two ways: by category, switching off an entire activity, or by threshold, excluding any company whose numbers miss the standard you set.
This guide maps the exclusion categories and thresholds you can screen on, traces where the practice came from, works through a few examples, and shows how to build the screen yourself in a stock and ETF screener.
Negative screening began with religious communities, not financial ones. In 1758 the Philadelphia Yearly Meeting of the Religious Society of Friends barred members from participating in the slave trade. Two years later John Wesley, founder of the Methodist movement, set out the basic tenets of social investing in his sermon “The Use of Money,” arguing that an investor should avoid industries liable to harm workers or neighbours. Those principles hardened into the familiar exclusions on tobacco, alcohol, firearms, and gambling.
The screens moved into public markets in the twentieth century. The Pioneer Fund, launched in 1928, was the first publicly offered fund built on social screens. In 1971 Luther Tyson and Jack Corbett, both of the United Methodist Church, launched the Pax World Fund for investors who did not want to hold companies tied to the Vietnam War. The 1980s added apartheid-era South Africa divestment, which remains the most-studied exclusion campaign in the record.
Through all of it the method stayed constant: identify an activity, then avoid the companies engaged in it. What changed is who holds the controls. For decades the exclusions came pre-packaged — chosen for you inside an SRI fund or ETF. Robo-advisors like Interactive Advisors later let individual investors toggle 'practices to avoid' and add single-stock exclusions, though still inside a portfolio the robo builds and manages. Today, those exclusions are built directly into a stock and ETF screener, putting that control in the investor's hands.
Negative screening removes securities on two separate grounds. The first is category exposure — what a company actually does. A coal producer or a tobacco maker is excluded for its business, however well it is run. The second is a metric that misses your standard — a number you draw a line on. A company in a permitted sector can still be cut for a global warming potential that runs too hot, or a CEO-to-median pay ratio you won't accept.
Category-based exclusion works on what a company sells, not how well it sells it. If a business earns revenue from an activity you've ruled out, it comes out. A defense contractor with strong governance will never clear a negative screen for revenue from weapons, and a profitable casino operator will never clear a negative screen for gambling revenue. The activity is the line. Each category also stands on its own: fossil fuel extraction, weapons manufacturing, tobacco, gambling, deforestation, and single-use plastics are screened independently, so you can exclude one without touching the rest.
Threshold-based exclusion works on a number, not a business line. You pick a metric, set a ceiling or a floor, and any company on the wrong side of it drops out — even one whose business you'd otherwise allow. A utility that sells no excluded product can still be cut for drawing too little of its energy from renewable sources, or for fines and violations that run past your tolerance limit. These metrics span environmental, social, and governance ground, and each is a line you draw yourself. A category toggle can't reach any of it; the full set, with a worked example, comes later in this guide.
Negative screening covers a broad range of harm categories, each assessed on a company's revenue exposure rather than its sector label. The table below shows common categories, not the full set — the screener extends further on the same basis.
The thresholds that decide each exclusion are set inside ACA Ethos's methodology, upstream of Ziggma. ACA Ethos is Ziggma's impact data partner. It assesses each company's actual revenue exposure to a harm category, then applies the threshold that determines exclusion.
Ziggma surfaces that result per security. The investor sees a clear pass or fail, not a dial to tune.
This is a methodology strength, not a limitation. A blanket rule applied by hand — say, any company over 5% tobacco revenue — treats a diversified conglomerate and a pure-play the same way. A specialist provider assessing exposure company by company is more precise than any single cut-off could be.
Negative screening isn't limited to switching off whole categories. An investor can set an expectation on a measurable metric and exclude every company that fails to meet it. This catches harm a category label never captures — a company in a permitted sector still drops out when its numbers miss the bar you set.
The Ziggma screener carries these thresholds as sliders. The metrics on offer include carbon intensity across Scopes 1–3, global warming potential, net-zero target date, percent of energy from renewable sources, overall employee ratings, CEO-to-median worker pay ratio, and fines and violations per $M revenue, among others. Each sets a floor or a ceiling; anything past it is excluded.
The world is racing to hold global warming under the Paris Agreement's 1.5°C. Global warming potential expresses a company's emissions as the temperature pathway they imply — a single figure in degrees. Invest agnostically, in the broad market, and you inherit the S&P 500's pathway: 4.1°C, well beyond 1.5°C. Set a GWP ceiling on the screener, and every holding whose implied pathway runs hotter than your limit is excluded, whatever its sector. A category toggle never catches this: a company can sell nothing on an exclusion list and still carry a 4°C pathway. The threshold is where that line gets drawn.
A category toggle can't see any of this. A metric threshold is where a values screen makes the call.
A fund can pass an ESG screen and still hold the exact companies a values screen removes. The two systems measure different things. An ESG rating scores a company's exposure to financially material risk. A harm-category screen reads the company's revenue exposure to the activity itself. A fund can score well on the first while holding names that fail the second.
Take ESGU, BlackRock's iShares ESG Aware MSCI USA ETF and one of the largest ESG funds in the world. It tracks the MSCI USA Extended ESG Focus Index, which is optimized to maximize ESG exposure while keeping its tracking error to the plain MSCI USA Index near zero. Staying that close to the parent index means optimizing within sectors rather than dropping them. So ESGU screens the narrow categories — tobacco, civilian firearms, controversial weapons, thermal coal, and oil sands — but keeps conventional oil and gas. Fossil Free Funds puts its fossil-fuel exposure near 5.9%.
That is the gap a holding-level screen closes. It reads through the fund to the securities underneath and flags every position with revenue in an excluded category — the conventional oil and gas ESGU keeps to track its index. The ESG label stays silent on that; the screen names it.
For the mechanics of how an ESG rating is built and what it leaves out, see how to read an ESG rating.
Excluding a whole category takes one click. In the Ziggma screener, every harm category is a switch — flip it from Ignore to Exclude and those companies drop out of your results. Presets go further: each one flips a whole group of switches at once, so you can apply a recognized standard like No Weapons without touching the rest.
The screener carries presets that map to how investors actually think about exclusion. No Weapons removes military weapons, firearms, and munitions exposure. No Vice Stocks removes the traditional vice categories in one filter. No Deforestation screens out land-conversion and unsustainable-forestry exposure. Beyond the presets, granular toggles reach further — Fossil fuel, Conflict minerals, Non sustainable palm oil, and conduct-based screens like Human rights controversies and Prison involvement — so an investor can move from a recognized standard to a fully custom exclusion set on the same screen.
Negative screening is subtractive. It takes harmful companies out of a portfolio. It does not move a single dollar toward a company doing measurable good. A fully excluded portfolio can be clean and still back nothing you'd actively choose.
Most values-driven investors start with exclusions and stop there. The result is a portfolio that is 'not bad' rather than aligned. Removing weapons, tobacco, and fossil fuels leaves cash that has to land somewhere — usually a broad index that's simply lighter on the excluded names.
Exclusion also works through a different lever than allocation. When enough investors refuse to hold a company, demand for its shares thins and, over time, it costs the company a little more to raise new money. But screening one holding out sends no dollars to a cleaner alternative. That mechanism, and its limits, is covered on the public-market impact investing hub.
Positive screening is the allocative half. It points capital toward companies with measurable outcomes — high Ziggma Impact Scores across Climate Action, Resource Use, Fair Labor, and Accountability. Names like Amalgamated Bank (AMAL), a certified B Corp, or Samsara (IOT), whose fleet technology targets safer roads and lower emissions, are the kind of holdings it surfaces. Where negative screening answers what your values prevent you from owning, positive screening answers what they point you toward.
