CFA Institute, GSIA and PRI release harmonised responsible-investment definitions

The CFA Institute, GSIA and PRI jointly released harmonised definitions for five responsible-investment terms: screening, ESG integration, thematic investing, stewardship, and impact investing. The standardised terminology aims to combat greenwashing and offers Indian asset managers and regulators a globally consistent vocabulary for responsible-investment communication.

The CFA Institute, the Global Sustainable Investment Alliance (GSIA), and Principles for Responsible Investment (PRI) released a resource to enhance comprehension and consistency in responsible-investment terminology. It addresses five terms: screening, ESG integration, thematic investing, stewardship, and impact investing. For each, the organisations provide a definition, detailed explanation, list of primary reference definitions, and practical guidance on use. The impetus arose from regulatory authorities' calls for standard-setting bodies to create common terms, ensuring uniformity within the global asset and wealth management sectors and contributing to the fight against greenwashing.

The resource affects investors, regulators, policymakers, and other financial-market participants who need precise, consistent terminology. It is intended to dispel confusion about the objectives of different responsible-investment approaches, such as distinguishing ESG integration from impact investing. The updated definitions acknowledge that responsible-investment approaches can be applied across various investment styles and asset classes, encompassing both public and private markets, rather than being specific to publicly listed companies as some previous definitions were, broadening their relevance across the asset-management industry.

The three organisations clarify that the resource focuses on aligning existing terms rather than introducing new terminology or meanings. They encourage the investment industry and regulators to adopt the definitions to create greater consistency. Asset managers and regulators should review the paper, available on each organisation's website, and consider adopting the harmonised terms to communicate responsible-investment practices accurately, succinctly, and consistently to clients, regulators, and other market participants amid rising expectations for transparent communication.

Key figure — Harmonised terms defined: five responsible-investment approaches