ESG Investing Glossary

Active risk refers to the potential for deviation or underperformance of an investment portfolio compared to its benchmark or intended target. It arises from the active management decisions made by portfolio managers who aim to outperform the market rather than passively replicating a benchmark.

Active risk is a measure of the volatility or variability of returns that can result from active investment strategies. It indicates the level of uncertainty or potential downside associated with pursuing active management.

Active ownership is an investment approach that goes beyond simply buying and selling stocks or other assets. It involves actively engaging with the companies in which investors hold ownership stakes to drive positive change and enhance long-term value.

Active owners, such as institutional investors and asset managers, recognize that they have influence and responsibility as shareholders. They believe that by actively participating in the decision-making processes of companies, they can promote better corporate governance, environmental sustainability, social responsibility, and ethical business practices.