The UK's Investment Association (IA) on 18 November launched its Responsible Investing Framework with a view to standardising green finance language and approaches. 

The Framework provides a list and accompanying definitions for Firm-level and Fund-level 'components' - Stewardship, ESG Integration, Sustainability Focus, Impact Investing and Exclusions - which may be used to identify responsible investments. 

For example, the component 'Exclusions' is defined as follows:

Exclusions prohibit certain investments from a firm, fund or portfolio. Exclusions may be applied on a variety of issues, including to align with client expectations. They may be applied at the level of:

  • Sector
  • Business activity, products or revenue stream
  • A company
  • Jurisdictions/countries

The Framework does not represent a standard, but is a set of industry-endorsed definitions. It is envisaged that the Framework can be used as a tool for a firm to articulate its responsible investment approach.

Quality assurance and vetting standards would be a separate and dedicated piece of future work, says the accompanying guidance.

Given the size of the IA's membership - it has 250 members who manage £7.7 trillion of assets - this is an important initiative.