Glossary of Terms & Acronyms – Social Impact Investing
- • BEST-IN-CLASS/POSITIVE SCREENING: Investment in sectors, companies or projects selected from a defined universe for positive ESG performance relative to industry peers.
- • CORPORATE ENGAGEMENT AND SHAREHOLDER ACTION: Employing shareholder power to influence corporate behavior through direct corporate engagement (i.e. communicating with senior management and/or boards of companies), filing or co-filing shareholder proposals, and proxy voting that is guided by comprehensive ESG guidelines.
- • ESG: Environment, social, and governance—refers to sustainable investment criteria used alongside traditional financial criteria in managing and selecting investments.
- • ESG INTEGRATION: The systematic and explicit consideration by investment managers of environmental, social and governance factors into financial analysis.
- • IMPACT INVESTING: Targeted investments aimed at solving social or environmental problems. Impact investing includes community investing, where capital is specifically directed to traditionally underserved individuals or communities, or financing that is provided to businesses with a clear social or environmental purpose.
- • INSTITUTIONAL INVESTORS: Organisations which generally manage large sums of money, including pension funds, insurance companies, investment companies, foundations, charities, public authorities and universities.
- • NEGATIVE/EXCLUSIONARY SCREENING: The exclusion from a fund or portfolio of certain sectors, companies or practices based on specific ESG criteria.
- • NORMS-BASED SCREENING: Screening of investments based on compliance with international norms and standards such as those issued by the OECD, ILO, UN and UNICEF; may include exclusions of investments that are not in compliance with norms or standards or over and underweighting.
- • SRI: A generic term covering sustainable, responsible, socially responsible, ethical, environmental, social investments and any other investment process that incorporates environmental, social and governance issues.
- • SUSTAINABILITY THEMED INVESTING: Investment in themes or assets that address specific sustainability issues such as climate change, food, water, renewable energy, clean technology and agriculture.
- • SUSTAINABLE INVESTMENT: An approach to investment where environmental, social and governance factors, in combination with financial considerations, guide the selection and management of investments.
Source: Global Sustainable Investment Alliance, April 2019