Socially responsive investing (SRI) has been an investment discipline for decades, initially centered on values and attributes of corporate social responsibility (CSR) while avoiding products that are perceived to cause societal harm. Since its early inception SRI has significantly expanded its focus to look beyond "avoidance" criteria and now seeks to encompass “best in class” companies with sustainable and competitive advantages.

The notion of “integrating” ESG (environmental, social and governance) criteria into mainstream investing has increasingly gained popularity as investors have begun to realize that a company’s ESG efforts are not just important to idealistic investors, but represent key considerations that can have a significant impact on a company’s bottom line—now and into the future. Companies that demonstrate strong overall environmental, social and governance performance are better positioned to add value in the long term.

According to Global Sustainable Investing Alliance,1 assets linked to ESG investing rose 25% since 2014, to about $23 trillion at the beginning of 2016. Domestically, according to US SIF, assets rose to $2.6 trillion in 2016.2 Despite the growth in assets linked to ESG strategies worldwide, there is often a lack of clarity around the different terminologies and concepts associated with these strategies. For the benefit of our investors, we provide a brief discussion on the evolution of the industry and the commonly used terminology to describe different approaches.

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