GSIA, CFA Institute and Principles for Responsible Investment (PRI) have issued a new resource that aims to bring greater understanding and consistency to terminology used in responsible investment, specifically:

• Screening
• ESG integration
• Thematic investing
• Stewardship
• Impact investing

For each term, CFA Institute, GSIA, and PRI have outlined a definition, detailed explanation, a list of definitions that served as the primary inputs, and guidance for using the terms in practice. The paper is intended for investors, regulators, policymakers, and other market participants.

The collaboration was inspired by calls from regulators for voluntary standard setters to develop common terms and definitions to ensure consistency throughout the global asset management and wealth management industries.

Promoting the consistent and precise use of terminology contributes to efforts to address greenwashing.

The work to harmonize terminology also serves to deepen understanding of the nuances of responsible investment approaches. It counters confusion about what different responsible investment strategies seek to achieve by clearly differentiating the objectives of approaches, such as ESG integration and impact investing.

The harmonized terminology contained in the joint resource responds to shifts that have taken place in the responsible investment landscape. Prior versions of the definitions were, in some cases, specific to investments in listed companies. These updated definitions reflect the reality that responsible investment approaches can be applied to a wide range of investment styles and asset classes, spanning both public and private markets.

The three organizations emphasize that this resource clarifies and harmonizes existing terms and definitions and does not create new terms or meanings.

Definitions

The terms agreed upon by CFA Institute, GSIA, and PRI are listed below. We would advise that these definitions are used within the context of the full report, which lists more information on each term, including a detailed explanation, a list of definitions that served as the primary inputs, and guidance for using the terms in practice.

✅ Screening (detailed definition on page 3): the application of rules based on defined criteria that determine whether an investment is permissible.

✅ ESG integration (page 8): ongoing consideration of ESG factors within an investment analysis and decision-making process with the aim to improve risk-adjusted returns.

✅ Thematic investing (page 12): selecting assets to access specified trends.

✅ Stewardship (page 14): The use of investor rights and influence to protect and enhance overall long-term value for clients and beneficiaries, including the common economic, social and environmental assets on which their interests depend.

✅ Impact investing (page 19): investing with the intention to generate a positive, measurable social and/or environmental impact alongside a financial return. This definition of impact investing is based on the Global Impact Investing Network definition of impact investments, which it defines as “investments made with the intention to generate positive, measurable social and environmental impact alongside a financial return”.

Download the full report here