ESG Investing Glossary

A carbon market is a system that enables the trading of carbon credits, which represent the right to emit a certain amount of carbon dioxide (or other greenhouse gases) into the atmosphere. It is a market-based approach to reducing greenhouse gas emissions and addressing climate change.

The main goal of a carbon market is to create economic incentives for reducing emissions by putting a price on carbon. By assigning a monetary value to emissions, the market encourages companies, industries, and governments to find cost-effective ways to reduce their carbon footprint. It provides a mechanism for entities to buy and sell emissions allowances or offsets, allowing those who can reduce emissions at a lower cost to sell their excess allowances to those who face higher costs in reducing emissions.

Carbon footprint refers to the total amount of greenhouse gas emissions, specifically carbon dioxide (CO2) and other greenhouse gases, generated directly or indirectly by an individual, organization, event, or product throughout its lifecycle. It is a measure of the impact of human activities on climate change.

Carbon dioxide (CO2) is a colorless and odorless gas that is naturally present in the Earth's atmosphere. It is composed of one carbon atom bonded with two oxygen atoms, and its chemical formula is CO2. CO2 is an essential component of the Earth's carbon cycle, playing a crucial role in maintaining the planet's temperature and supporting life.

Best-in-class investment is an approach that involves selecting investments from a specific industry or sector based on their performance or sustainability relative to their peers. In this approach, investors aim to identify companies that are leaders in terms of their environmental, social, and governance (ESG) practices compared to others within the same industry.

Bayesian inference is a statistical approach used to update beliefs or knowledge about a hypothesis or parameter based on observed data. It is named after Thomas Bayes, an 18th-century mathematician.

Automation refers to the use of technology and machines to perform tasks or processes that were previously carried out by humans. It involves the use of various technologies, such as robotics, artificial intelligence (AI), and computer systems, to streamline and automate repetitive or labor-intensive activities.

Automation has the potential to significantly impact industries, businesses, and society as a whole. It aims to improve efficiency, productivity, accuracy, and safety by reducing human involvement in routine or mundane tasks. By automating these tasks, companies can free up human resources to focus on more complex, creative, and strategic activities.

Animal welfare refers to the ethical and compassionate treatment of animals, taking into consideration their well-being and quality of life. It encompasses the physical, mental, and emotional needs of animals, as well as their protection from cruelty, neglect, and unnecessary suffering.

Animal welfare is an important aspect of ethical and responsible behavior towards animals. It recognizes that animals have inherent value and deserve to be treated with respect and dignity. It extends to all animals, whether they are domesticated, farmed, or wild.

Alpha generation refers to the ability of an investment manager or strategy to generate returns that exceed the performance of a benchmark or the overall market. It is a measure of the manager's skill in selecting investments and making strategic decisions to outperform the market and generate positive returns.

AGM stands for Annual General Meeting, while EGM stands for Extraordinary General Meeting. Both AGMs and EGMs are formal meetings held by companies to engage with their shareholders or members.

- Annual General Meeting (AGM): An AGM is a mandatory meeting held by companies once a year. It provides an opportunity for shareholders or members to receive updates on the company's performance, financial statements, and future plans. The AGM typically covers various agenda items, including the election of directors, appointment of auditors, approval of financial reports, and any other matters specified in the company's constitution. Shareholders can also ask questions, express their concerns, and vote on resolutions during the meeting.

- Extraordinary General Meeting (EGM): An EGM is a special meeting called by a company outside of its regular AGM schedule. EGMs are held to address specific urgent matters or significant changes that require shareholder approval. These matters may include amendments to the company's constitution, approval of major transactions, changes in share capital, mergers or acquisitions, and other significant decisions that cannot be delayed until the next AGM. Shareholders have the right to vote on resolutions related to the specific matters discussed at the EGM.

Activism refers to the practice of taking action to bring about social, political, or economic change. It involves individuals or groups advocating for specific causes, voicing their opinions, and working towards influencing public opinion, policies, or practices.