Investment Association issues ESG terms

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