The Investment Association has published industry wide definitions for ESG funds.
The definitions published on 18 November are an attempt to bring a common language and framework that describes responsible investment products. They come after contributions from 40 investment managers supporting a fund-level label.
The agreed terms are:
Stewartship: the responsible allocation, management and oversight of capital to create long-term value leading to sustainable benefits for the economy, the environment and society
ESG integration: the systematic and explicit inclusion of material environmental, social and governance (ESG) factors into investment analysis and investment decisions
Exclusions: prohibitions of certain investments from a firm, fund or portfolio
Sustainability focus: approaches that select investments on the basis of their fulfilling certain sustainability criteria and/or delivering on specific and measurable sustainability outcome
Impact investing: investments made with the intention to generate positive, measurable social and environmental impact alongside a financial return