Over the years, many terms have been used interchangeably to describe the incorporation of ethical, environmental or social factors into investment fund management: ethical investment, socially-responsible investment, green investment, responsible investment, ESG - to name but a few.
The meaning of these various terms all overlap and many have particular resonance for different industry participants.
Sustainable (& Responsible) Investment
We prefer the term ‘Sustainable and Responsible Investment’ (SRI) meaning:
- ‘investment which takes sustainable development priorities into account’ or
- ‘investment which seeks to meet the needs of the current generation without compromising the ability of future generations to meet their own needs’.
This latter definition aligns sustainable investment closely with the concept of sustainable development as defined by the Brundtland Commission in 1972.
ESG
The term 'ESG' is widely used and refers to the application of Environmental, Social and (corporate) Governance considerations to investment pratice.
Keep it practical
In such a fast-growing area, however, a broad-based term is best understood by reference to its current practical application rather than to any dictionary definition.
We describe some of the current practical applications on the following pages.
