Posted on Wednesday, July 1, 2020

The Investment Company Institute (ICI) published in July 2020 a report on “Funds’ Use of ESG Integration and Sustainable Investing Strategies: An Introduction”. ICI established an ESG Working Group to review and address how funds describe ESG integration and sustainable investing strategies. The group determined that it would be good practice for funds to use consistent terminology to describe ESG strategies. The paper, which was endorsed by the ICI’s Board of Governors’, notes the following terms:

  • “ESG integration” refers to fund managers incorporation of ESG considerations in to their investment process along with other material factors and analysis.
  • “Sustainable investing strategies” refers to funds that use ESG analysis as a significant part of the funds investment thesis to respond to investor objectives and attain sustainability-related outcomes while seeking financial returns. ICI further defined these strategies as:
    • “ESG Exclusionary investing” which is an investment approach excluding certain companies or sectors
    • “ESG Inclusionary investing” which is an approach that tilts its portfolio based on ESG factors.
    • “Impact Investing” which is an approach designed to generate positive, measurable social and environmental impacts.

Read the ICI ESG Report.