ESG Investing Glossary

External social factors refer to the influences and conditions that originate from outside of an organization or individual and have an impact on their social environment. These factors can shape attitudes, behaviors, and societal norms, ultimately affecting various aspects of business operations, decision-making, and overall social dynamics.

Exposure, in the context of investing, refers to the degree to which an investment portfolio or individual security is exposed to certain risks or factors that can influence its performance. It represents the level of vulnerability or sensitivity of an investment to specific market conditions, sectors, regions, or other factors that may impact its returns.

An exclusion list, also known as a restricted list or a negative screening list, is a tool used in investment management to exclude certain companies, industries, or activities from an investment portfolio based on specific criteria. The purpose of an exclusion list is to align investment decisions with ethical, social, or environmental considerations by avoiding investments that do not meet predefined standards.

Ethical and faith-based investment, also known as values-based investment, is an investment approach that takes into consideration specific ethical or religious principles when making investment decisions. It allows investors to align their investment choices with their values, beliefs, and moral convictions.

ESG investing, also known as sustainable investing or socially responsible investing (SRI), is an investment approach that considers environmental, social, and governance (ESG) factors alongside financial factors when making investment decisions. The goal of ESG investing is to generate positive financial returns while also creating a positive impact on society and the environment.

ESG integration refers to the process of considering environmental, social, and governance (ESG) factors in investment decision-making and portfolio management. It involves incorporating ESG considerations alongside traditional financial analysis to assess the risks and opportunities associated with investments.

Escalation refers to the process of intensifying or increasing the level or severity of a situation or conflict. It typically occurs when efforts to resolve a problem or disagreement at a lower level are unsuccessful, leading to a progression towards higher levels of authority, involvement, or confrontation.

An environmental audit, also known as an environmental assessment, is a systematic evaluation of an organization's activities, processes, and operations to assess their impact on the environment. The purpose of an environmental audit is to identify potential environmental risks, evaluate compliance with environmental regulations, and recommend measures for improvement.

The environment refers to the natural world around us, including all living and non-living things, such as air, water, land, plants, animals, and ecosystems. It encompasses the physical, biological, and chemical factors that interact and shape the Earth's systems.

Engagement, in the context of various fields such as finance, sustainability, and corporate governance, refers to the process of actively interacting and communicating with companies, stakeholders, or other relevant parties to drive positive change, address concerns, and promote responsible practices. It involves dialogue, collaboration, and influence to achieve desired outcomes.