Responsible Investment - A glossary of terms

A short guide to help you understand the meaning of some of the more commonly used terms and expressions relating to Responsible Investment.
December 2019

Responsible investing is moving mainstream, with more and more people interested in whether their money is being managed in a sustainable way; they want to align their financial decisions with their values.

BMO Global Asset Management launched Europe’s first ethical fund for private investors in 1984 and our Responsible Investing team is one of the largest specialist teams in Europe.  We are incredibly proud of our heritage in responsible investing and the pioneering role we have played.

We are aware that many terms are being used interchangeably in this field, which can make it confusing for our clients and investors. We have therefore created this short guide to help you understand the meaning of some of the more commonly used terms and expressions. We hope you find it useful. Download the PDF here.

discharging responsibilities as investors and owners in a company through engagement and voting to influence the management on environmental, social and governance issues. 

an approach in which a company’s ESG performance is compared with that of its peers based on a sustainability rating. All companies with a rating above a defined threshold are considered as investable. They don’t exclude whole industries, but concentrate on the highest ESG scoring companies in a particular sector.

the processes according to which a company is directed and controlled. The corporate governance structure specifies the rights and responsibilities of the board, managers, shareholders and other stakeholders and lays down rules and procedures for decision-making.

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