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About ESG definitions

Leading the transition to a sustainable and just future more decisively

About ESG definitions

ESG investing, sustainable investing, socially responsible investing, ethical investing, and impact investing are terms often used interchangeably. They describe, however, heterogenous investment approaches that have important differences.

ESG investing refers to a broad concept of considering earth’s ecosystem but also societal implications and the governance responsibilities of companies. Sustainable investing mostly refers to investing within the limits of the regenerative capacity of our planet. Socially responsible investing aims to invest in a socially conscious way to avoid doing harm and bring about positive social change. Ethical investing is the practice of allocating capital based on ethical or moral principles. Impact investing on the other hand is more focused, aiming to generate a measurable beneficial impact to the environment or society.

Our view

Our view: At Osmosis, we believe it is important to have a clear definition of sustainable investing and use concise terminology to help investors understand the non-financial benefits as well as the risk-adjusted return profiles that can be expected from our strategies and funds. We use the concept of Resource Efficiency defined at the company level, using Osmosis’ proprietary environmental database, that measures carbon emission generation and water usage, along with waste creation in order to produce one unit of revenue. Resource efficient companies are therefore those which most efficiently use limited resources to create economic value.

Tom square

Dr. Tom Steffen

Quant Research

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In this article we look at what the investment community needs to do better in order to use its substantial influence to lead the transition to a sustainable and just future more decisively.


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Important Information

This document is issued by Osmosis Investment Management US LLC (“Osmosis”). Osmosis Investment Management UK Limited (“Osmosis UK”) is an affiliate of Osmosis and has been operating the Osmosis Model of Resource Efficiency. Osmosis UK is regulated by the FCA. Osmosis and Osmosis UK are both wholly owned by Osmosis (Holdings) Limited (“OHL”).

 

Contact us

For more information on this article or any of Osmosis' funds and strategies please contact [email protected] or call +44 203 928 6558.