Defining investment terms
Investing that avoids companies that produce, transport, and refine fossil fuels. This investment strategy also avoids industries with high emissions. This approach is called negative screening.
Impact investing aims to generate a social or environmental difference in addition to financial gains. Impact investing goes beyond negative screening by including businesses that do the most good.
Responsible investors commit to incorporating Environmental, Social, and Governance (ESG) factors in investment decisions and in active ownership. Responsible Investing does not require any negative or positive screening, but rather building ESG thinking into traditional analysis.
Active ownership includes voting proxies towards objectives and shareholder engagement with management. Active owners take a more proactive stand and advocate for change.
SRI (Socially Responsible Investing)
SRI investors focus on ethics and social concerns. This approach avoids industries that aren’t aligned with client values, such as tobacco and weapon companies. The Genus Fossil Free funds are socially responsible.
ESG (Environmental, Social, and Governance)
ESG stands for Environmental, Social, and Governance. Starting in the 1990’s, the investment and business community increased their attention on good governance such as board policies, executive compensation, and shareholder protections. Over the past 30 years, that focus has increasingly expanded to additional stakeholders, notably employees, customers, and the environment. There are at least six ways to implement ESG Investing, such as:
- Negative Screening (exclusionary)*
- Best-in-class Selection*
- Active Ownership*
- Thematic Investing*
- Impact Investing*
- ESG Integration*
*Included in Genus Fossil Free strategies
UN SUSTAINABLE DEVELOPMENT GOALS (SDGs)
The UN (United Nations) SDGs are 17 goals that work together to form a blueprint for a better and more sustainable future for all. With a target of 2030, the goals address challenges such as poverty, inequality, climate change, environmental degradation, peace and justice.
Stranded assets are corporate investments that have suffered from unanticipated or premature write-downs or devaluations. This can be caused by a variety of factors such as changes of regulation, social acceptance, or consumer preferences. Stranded assets usually refer to fossil fuel reserves, such as unmined coal, or infrastructure.
Greenwashing is the process of conveying a false impression or providing misleading information about how a company’s products are environmentally conscious. As sustainable investing has gained momentum there is increasingly a risk of bandwagon jumping that is more promotional than real.