Glossary |
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Definitions
C
Corporate responsibility is the ethos of running a corporation with due consideration of all its stakeholders: shareholders, employees, customers and society.
E
Engagement, in the context of Responsible Investment, is the act of responsibly using our influence as a shareholder to enter into dialogue with a company. The responsible exercise of shareholder rights can help encourage companies to give due consideration to all of its stakeholders: shareholders, employees, customers and society.
Factors that measure the impact that a company and its activities have on the environment. Environmental impact is one of the three extra-financial factors that are usually considered when implementing an extra-financial analysis, alongside the company’s social and governance performance.
Measures of environmental impact can include a company’s tendency to pollute air and water, its energy management policies, the resources it consumes and the direct impact its activities have on the local environment.
ESG is an abbreviation of ‘environmental, social and governance’ factors. These are the three main areas that make up the integration of extra-financial factors into mainstream analysis of a company.
Extra-financial factors are elements of a company’s behaviour that may not be immediately apparent solely from an analysis of its financial performance. These factors – environmental, social and governance – may not be quantitatively measured by a company’s financial reports. An analysis of these factors must take place in addition to, and integrated with, a more traditional financial analysis of the company as part of the Responsible Investment decision-making process.
When a company is being analysed through an extra-financial lens, its governance procedures are taken into consideration. Governance is one of the three extra-financial factors that are considered, alongside the company’s environmental and social performance.
Measures of governance can include a company’s internal structure and practices, the consideration it gives to shareholder rights, its transparency and its accountability.
M
Mainstreaming, in the context of Responsible Investment, is the incorporation of extra-financial factors into the core investment decision-making process. This extra-financial analysis therefore becomes fully integrated into the overall analysis of a company’s performance potential.
Mainstreaming and integration are fundamental parts of the Responsible Investment ethos, of ensuring that environmental, social and governance factors are given full consideration – and research support – as an integral part of the investment decision-making process.
R
Responsible Investment, as practised by AXA IM, has three key elements:
Responsible Investment products allow clients of AXA IM to align their investments with their ethical beliefs. Responsible Investment also enables AXA IM to identify and engage with companies whose future performance may benefit from consideration of environmental, social and governance (ESG) factors.
S
When a company is analysed through an extra-financial lens, the impact that it and its activities have on society is taken into consideration. Societal impact is one of the three extra-financial factors that are considered, alongside the company’s environmental and governance performance.
Measures of societal impact can include a company’s labour management policies and approach towards equal opportunities and human rights, and the direct impact its activities have on the local community. Sustainable development is development that happens today, but that is not going to prejudice the potential for development tomorrow – development that uses resources today, but that will not deny use of those resources to future generations, or development that meets current needs while keeping in consideration the world’s future needs. |
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