The CFA Institute, the Global Sustainable Investment Alliance (GSIA) and Principles for Responsible Investment (PRI) have joined forces to publish harmonized definitions for responsible investment (RI) terminology. “We now encourage the investment industry and regulators to adopt these definitions to create greater consistency,” the organizations state in an announcement about the publication of the new resource.
Aimed at bringing greater understanding and consistency to the terms used in RI, the organizations have outlined five detailed definitions and explanations, a list of the definitions that served as primary inputs and guidance for using the terms in practice. “The paper is intended for investors, regulators, policymakers and other market participants,” they add.
The five terms discussed include the words screening, ESG (environmental social and governance) integration, thematic investing, stewardship and impact investing.
The organizations say the consistent and precise use of the right terminology will contribute to efforts to address greenwashing.
“The work to harmonize terminology also serves to deepen the understanding of the nuances of RI approaches. It counters confusion about what different RI strategies seek to achieve by clearly differentiating the objectives of approaches, such as ESG integration and impact investing,” they write. “The RI approaches defined in this paper are not mutually exclusive and, in practice, are often used in combination. This resource aims to harmonize existing terms and definitions – not create new terms or meanings.”
