Reporting Framework glossary

The Glossary contains the main and most frequently used terms in the PRI Reporting Framework and how the PRI defines them. These definitions are key for preparing to report, as well as to understand the information reported by others.

Updated: 14 February 2024

Within the PRI Reporting Framework Glossary, we provide definitions for key terms to guide reporting on responsible investment practices in the Reporting Framework. These definitions may differ from those used or proposed by other authorities and regulatory bodies due to evolving industry perspectives and changing legislative landscapes.

ENVIRONMENTAL, SOCIAL AND GOVERNANCE ISSUES

ESG factors	Environmental, social and governance issues that are identified or assessed in responsible investment processes. - Environmental factors are issues relating to the quality and functioning of the natural environment and natural systems. - Social factors are issues relating to the rights, well-being, and interests of people and communities. - Governance factors are issues relating to the governance of companies and other investee entities.
Environmental factors	Issues relating to the quality and functioning of the natural environment and natural systems, identified or assessed in responsible investment processes.
Social factors	Issues relating to the rights, well-being and interests of people and communities, identified or assessed in responsible investment processes.
Governance factors	Issues relating to the governance of companies and other investee entities, identified or assessed in responsible investment processes.
Material ESG factors	ESG factors with a substantial impact on the current and future financial, economic, reputational and legal prospects of an issuer, security, investment or asset class. This term may also refer to factors related to significant impacts on people or planet connected to an issuer, security, investment, or asset class. At a corporate or issuer level, the disclosure of a material ESG factor would be reasonably expected by investors, as its omission, misstatement or obscuring could reasonably be expected to influence decisions that investors make on the basis of that reporting.
ESG materiality analysis	Identifying and assessing the materiality of ESG factors for current and potential investments.
ESG incidents	Events caused by ESG factors that have a substantial negative impact on a security, issuer, or investment and its key stakeholders including, investors, employees, communities and the environment.
ESG risks	An environmental, social or governance risk is a factor or issue that may expose a security, issuer, investment or asset class to unexpected changes in its current and future financial, economic, reputational and legal situation. Investors could reasonably expect an ESG risk to be disclosed at a corporate or issuer level, as its omission would result in an incomplete understanding of current or future financial prospects.
ESG opportunities	An ESG opportunity arises due to changes in ESG factors that might stem from regulation, technology, consumer demand development, or from other drivers that affect the current and future financial, economic, reputational and legal prospects of an investment opportunity. The ESG opportunity may also result in an improved sustainability outcome for the environment, the community or society.
ESG trends	An ESG trend reflects the change in one or more ESG factors over a period of time. If it concerns material ESG factors, an ESG trend may have implications for the future direction of the financial, economic, reputational and legal prospects of an issuer, security, investment or asset class.
ESG index/ESG benchmark	An index or benchmark whose securities have been selected or weighted following the consideration of ESG factors.
Systematic sustainability issues	Issues that pose systematic risks to the common economic, environmental and social assets on which returns and beneficiary interests, depend. Systematic risk (interchangeable with “market risk” or “market-wide risk”) refers to risks transmitted through financial markets and economies that affect aggregate outcomes, such as broad market returns. Because systematic risk occurs at a scale greater than a single company, sector or geography, it cannot be hedged or mitigated through diversification. However, systematic sustainability issues can, and should, be influenced through responsible investment activities.
ESG/sustainability marketed funds or products	Investment products that are explicitly marketed, labelled, or in other ways claimed as considering ESG factors or sustainability outcomes in their objectives, investment process, or stewardship activities. These products could be segregated or pooled products for either the retail or institutional market.
ESG/RI certification or label	A certification or label awarded for a fixed period of time for a fund or product by an independent third-party ESG/sustainability initiative or labelling scheme focussed on one or more ESG factors or sustainability outcomes, upon auditing that the fund or product meets predefined criteria of the initiative or scheme.

ESG INCORPORATION STRATEGIES

ESG incorporation	Assessing, reviewing and considering ESG factors in existing investment practices through a combination of three approaches: integration, screening and thematic investing. ESG incorporation generally functions alongside, or in combination with, stewardship.
ESG integration	Ongoing consideration of ESG factors within an investment analysis and decision-making process with the aim to improve risk-adjusted returns.
Screening	Applying rules to a universe of securities, issuers, investments, sectors or other financial instruments to rule investments in or out, based on pre-specified criteria which might include an investor’s preferences or investment metrics and are part of an investment process or reflect a client or fund mandate. When used as an ESG incorporation approach, screening can be positive, best-in-class, norms-based or negative.
Positive/best-in-class screening	Positive screening: Applying rules to determine whether securities, issuers, investments, sectors or other financial instruments are permissible for inclusion in an investment product or portfolio based on performance on specific environmental, social or governance criteria. Best-in-class screening: Applying rules to determine whether securities, issuers, investments, sectors or other financial instruments are permissible for inclusion in an investment product or portfolio based on performance on specific environmental, social or governance criteria relative to peers.
Negative screening/exclusions	Applying filters to a universe of securities, issuers, investments, sectors or other financial instruments to rule them out, based on poor performance on ESG factors relative to industry peers or specific environmental, social or governance criteria. This may include ruling out particular products, services, regions, countries or business practices.
Norms-based screening	Applying rules to determine whether securities, issuers, investments, sectors or other financial instruments are permissible for inclusion in an investment product or portfolio based on compliance with standards of practice aligned with international norms. Widely recognised frameworks for minimum standards include the OECD Guidelines for Multinational Enterprises, the International Bill of Human Rights, and the UN Global Compact.
Thematic investing	An approach which focuses on selecting assets to access specified ESG trends.

STEWARDSHIP

Stewardship	The use of influence by investors to protect and enhance overall long-term value, including the value of common economic, social and environmental assets, on which returns and client and beneficiary interests depend.
Stewardship tools and activities	Methods through which investors fulfil their stewardship obligations. Tools and activities can be split into investee stewardship and broader stewardship. Tools and activities for investee stewardship differ by asset class, but can include: engagement with investees (both current and potential), voting at shareholder meetings, filing, co-filing, or submitting shareholder resolutions or proposals, nomination of directors to the board, leveraging roles on the board or on board committees, direct oversight of portfolio companies or assets, and litigation. Tools and activities for broader stewardship can include: policy engagement, engagement with standard setters, engagement with industry groups, negotiation with and monitoring of the stewardship actions of intermediaries in the investment chain, e.g. asset owners engaging external managers, limited partners engaging general partners, engagement with other stakeholders, e.g. NGOs, workers, communities, and other rights-holders, and contributions to public goods (e.g. publicly available research) or to public discourse (e.g. through the media) that supports stewardship goals.
Engagement	Interactions and dialogue conducted between an investor, or their service provider and a current or potential investee (e.g. company), or a non-issuer stakeholder (e.g. an external investment manager or policy maker) to improve practice on an ESG factor, make progress on sustainability outcomes, or improve public disclosure. In private markets, engagement also refers to investors’ dialogue with management teams and/or Board of portfolio companies and/or real assets.
Overall political engagement	The process that investors and other interest groups undertake to contribute and participate in the political process to shape laws, regulations and policies that affect their business objectives, broader operating environment and societal goals. Overall political engagement takes many forms: it includes, but is not limited to, engaging with policy makers to contribute to specific policy developments, lobbying, making political contributions, using revolving doors (the movement of senior people between the private and public sectors), shaping public opinion through mass media and social media campaigns, and funding grassroot organisations and think tanks. Overall political engagement can be carried out directly or through a third party such as a trade association or industry body.
Collaboration (stewardship)	Collaboration in the context of stewardship refers to investors or their service providers working together, and/or with other stakeholders, to pool resources and enhance their effectiveness in pursuing their stewardship objectives. Collaboration can include informal means, such as sharing insights on how to approach an issue with peers, as well as formal mechanisms such as collaborative engagements or initiatives, or the use of an external service provider (e.g. engagement overlay service) that pools resources from multiple investors.
(Proxy) voting	The exercise of voting rights on management and/or shareholder resolutions to formally express approval, or disapproval, on relevant matters. This includes being responsible for how votes are cast on topics that management raises and submitting resolutions as a shareholder for other shareholders to vote on, in jurisdictions where this is possible. Investors can vote in person during an Annual General Meeting (AGM), or by proxy – using a person or firm, such as an investment manager, to vote on their behalf.
Voting principles	High-level statements which explain an investor’s position on ESG factors and how they vote on shareholder and management resolutions at company meetings to effect progress on those issues.
Securities lending (or share lending)	Temporarily transferring shares from a lender to a borrower, where the borrower agrees to return the equivalent shares to the lender at a specific time and pay lending fees. Securities lending usually involves an intermediary organisation.
Escalation	Escalation in the context of stewardship is the approach an investor takes if initial stewardship approaches are unsuccessful at achieving its objectives over a given time period. Escalation differs by asset class and investor type, but generally involves the use of increasingly assertive stewardship tools and activities.

CLIMATE CHANGE

Climate-related risks	Potential negative impacts of climate change on an organisation, divided into two major categories: physical risks and transition risks. Physical risks can be event-driven (acute), such as increased severity of extreme weather events, e.g. cyclones, droughts, floods, and fires. They can also relate to longer-term (chronic) shifts in precipitation and temperature, increased variability in weather patterns or other long-term changes such as sea level rise. Climate-related risks can also be associated with the transition to a lower-carbon global economy, the most common of which relate to policy and legal actions, technology changes, market responses and reputational considerations. This definition is in line with the 2021 TCFD guidance document “Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures”.
Climate-related opportunities	Business or financial opportunities resulting from efforts to address climate change. Efforts to mitigate and adapt to climate change can produce opportunities for organisations, such as through resource efficiency and cost saving, the adoption and utilisation of low-emission energy sources, the development of new products and services, and building resilience along the supply chain. Climate-related opportunities vary depending on the region, market and industry in which an organisation operates. This definition is in line with the 2021 TCFD guidance document “Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures”.
Physical (climate) risks	Physical risks emanating from climate change can be event-driven (acute), such as increased severity of extreme weather events, e.g. cyclones, droughts, floods, and fires. They can also relate to longer-term shifts (chronic) in precipitation and temperature and increased variability in weather patterns or other long-term changes such as sea level rise. These risks may often be more easily identifiable in alternative assets, such as infrastructure and property. This definition is in line with the 2021 TCFD guidance document “Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures”.
Transition risks	Climate-related risks associated with the transition to a lower-carbon global economy, the most common of which relate to policy and legal actions, technology changes, market responses and reputational considerations. This definition is in line with the 2021 TCFD guidance document “Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures”.
Scenario analysis	Identifying and assessing the potential implications of plausible future states, under conditions of uncertainty. Scenarios are hypothetical constructs and not designed to deliver precise outcomes or forecasts. Instead, they provide a way for organisations to consider how the future might look if certain trends continue or certain conditions are met. For example, in the case of climate change, scenarios allow an organisation to explore and understand how various combinations of climate-related risks, both transition and physical risks, may affect its businesses, strategies, and financial performance over time. Scenario analysis can be qualitative, relying on descriptive and written narratives, or quantitative, relying on numerical data and models, or some combination of both.
Weighted average carbon intensity	A portfolio’s exposure to carbon-intensive companies expressed in tonnes CO2e (carbon dioxide equivalent) / $M revenue. This definition is in line with the 2021 TCFD guidance document “Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures”.
Total carbon emissions	The absolute greenhouse gas emissions associated with a portfolio, expressed in tonnes CO2e. To calculate this, Scope 1 and Scope 2 GHG emissions are allocated to investors based on an equity ownership approach. Under this approach, if an investor owns five per cent of a company’s total market capitalisation, then the investor owns five per cent of the company as well as five per cent of the company’s GHG (or carbon) emissions. This definition is in line with the 2021 TCFD guidance document “Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures”.
Avoided emissions	An estimated measure of the reduction in life cycle emissions of a product, portfolio or service between a baseline (business-as-usual) scenario or reference product and the alternate (low-carbon) product, portfolio or service. This definition is in line with the 2022 CDP guidance document “CDP Climate Change 2022 Question-level Guidance”.
Internal carbon price	An internally developed estimated cost of carbon emissions, which can be used as a planning tool to help identify revenue opportunities and risks, as an incentive to drive energy efficiencies to reduce costs, and to guide capital investment decisions. This definition is in line with the 2017 TCFD guidance document “Final Report: Recommendations of the Task Force on Climate-related Financial Disclosures”.
Implied Temperature Rise (ITR)	The future average global temperature rise, compared to pre-industrial levels, which could be expected if the global economy’s emissions mirrored that of a given portfolio. This definition is in line with the 2020 TCFD guidance document “TCFD Forward-Looking Financial Sector Metrics Consultation”.

SUSTAINABILITY OUTCOMES

Sustainability outcomes	The positive and negative effects of investment activities on people and/or the planet. They are understood in the context of global sustainability goals and thresholds.
Taking action on (sustainability) outcomes	The investors’ use of their own levers/tools to work towards global sustainability goals and thresholds. This means working to increase positive sustainability outcomes and/or decrease negative sustainability outcomes. These levers/tools include capital allocation and stewardship.
Global (sustainability) goals and thresholds	The global social, environmental and governance goals and thresholds that are reflected in internationally recognised frameworks and that provide pathways toward a sustainable economy, society and environment. These frameworks include, but are not limited to, the International Bill of Human Rights, the UNFCCC Paris Agreement, the UN Sustainable Development Goals (SDGs) and the UN Guiding Principles on Business and Human Rights (UNGPs).

GENERAL

Responsible investment policy	A policy capturing an organisation’s intention and approach to incorporating ESG factors in investment decisions and stewardship and/or to take action on sustainability outcomes in line with global goals and thresholds. An organisation’s responsible investment policy can take many shapes. It may involve embedding responsible investment considerations into the organisation’s main investment policy. It could also consist of a standalone responsible investment policy. Alternatively, it could be captured in high-level specific public statements, commitments, or codes of business practice to which the organisation adheres.
Investment decision-making process	Research, analysis, and other steps that lead to a decision to make, maintain, or modify an investment (e.g. to buy, sell, or hold a security), or commit capital to an unlisted fund or other asset.
Portfolio construction	Selecting assets to ensure a segregated or pooled portfolio reflects investment goals, risk tolerances and time horizon of the client(s) invested within that portfolio. This may involve individual asset selection and allocation between asset classes.
Due diligence	A systematic process to collect and interpret information about a prospective investment, which includes both technical and financial due diligence. Where there is reference to human rights due diligence, this refers to an ongoing risk management process that a reasonable and prudent investor needs to follow in order to identify, prevent, mitigate, and account for how it addresses negative human rights outcomes which they are connected to. It includes four key steps: - assessing actual and potential human rights impacts, - integrating and acting on the findings,- tracking responses, and - communicating about how impacts are addressed. This definition is in line with the UN Guiding Principles on Business and Human Rights (UNGPs).
Risk management	The processes the organisation uses to identify, assess and manage risks.
Service provider	A third-party external provider of services, excluding managing client assets. Service providers can also include organisations that have an explicit mandate to represent and conduct services on their members behalf.
Subsidiary	An entity partly or wholly controlled by another entity, known as the parent or holding company. The parent or holding company holds a large proportion (or all) of the voting rights in a subsidiary, allowing it to exert direct or indirect control over it. If the parent or holding company holds 100% of the subsidiary’s voting rights, the subsidiary is considered a wholly owned subsidiary.
Strategic asset allocation	Setting target allocations for various asset classes, usually to serve as reference in the medium/long term. The target allocations are based on factors such as the investment and/or sustainability outcomes objectives, the asset classes’ expected returns, correlations and investor’s risk tolerance and time horizon.
Investment committee	A decision-making body that oversees and advises management on an organisation’s investment assets. This committee usually has the primary responsibility for investment strategies, objectives, processes and investment decisions. It often works with investment consultants or advisors and its responsibilities differ depending on local regulations.
Commodities	Physical goods attributable to a natural resource that is tradable and supplied without substantial differentiation by the general public. Commodities are traded in physical (spot) markers and in futures and forward markets. These include direct investments in physical assets, long exposure to commodities through commodity futures contracts, and commodity exchange-traded funds (ETFs).
Green bond	Bond instrument whose proceeds will be applied exclusively to finance or refinance, in part or in full, new and/or existing projects which contribute to environmental objectives within four core components: use of proceeds, process for project evaluation, selection and management of proceeds, and reporting. Environmental objectives include, for instance: climate change mitigation, climate change adaptation, natural resource conservation, biodiversity conservation and pollution prevention and control. This definition is in line with the 2021 ICMA guidance document “Green Bond Principles - Voluntary Process Guidelines for Issuing Green Bonds”.
Social bond	Bond instrument whose proceeds will be applied exclusively to finance or refinance, in part or in full, new and/or existing projects. Such bonds directly aim to address or mitigate a specific social issue and/or seek to achieve positive social outcomes, especially, but not exclusively, for a target population(s) within four core components: use of proceeds, process for project evaluation, selection and management of proceeds, and reporting. This definition is in line with the 2021 ICMA guidance document “Green Bond Principles - Voluntary Process Guidelines for Issuing Green Bonds”.
Sustainability bond	Bond instrument whose proceeds will be applied exclusively to finance or refinance, in part or in full, new and/or existing projects. Such bonds contribute to a combination of environmental objectives and positive social outcomes, within four core components: use of proceeds, process for project evaluation, selection and management of proceeds, and reporting. This definition is in line with the 2021 ICMA guidance document “Green Bond Principles - Voluntary Process Guidelines for Issuing Green Bonds”.
Sustainability-linked bonds	Any type of bond instrument for which the financial and/or structural characteristics can vary depending on whether the issuer achieves predefined sustainability/ ESG objectives. This definition is in line with the 2020 ICMA guidance document “Sustainability-Linked Bond Principles: Voluntary Process Guidelines”.

ASSET CLASS BREAKDOWN

Internally managed assets	Assets for which investment decisions at a security, asset or financial instrument level are made in-house by the signatory. This should include consolidated and wholly owned subsidiaries of the signatory. Signatories that perform internal research that supports investment decisions and/or provides lists of eligible (or ineligible) securities, assets or financial instruments to sub-advisor(s) should list their assets as internally managed.
Externally managed assets	Assets for which investment decisions at a security, asset, or financial instrument level are made on an organisation’s behalf by an external investment manager or similar third party. Fund managers should report their assets as externally managed where the above applies.
Listed equity	Equity that is traded on a stock exchange. It includes all listed equity in all jurisdictions.
Passive listed equity	Listed equity investment strategies and activities that mirror the performance of an index or design indices that reflect exclusions, themes or tilts (such as weighting based on ESG factors), and follow predetermined rules that do not involve active discretionary investment forecasting and decisions.
Active - Quantitative equity	Systematic listed equity investment strategies that use computer-based models to regularly determine which investments to include in a portfolio based on security metrics and statistical relationships between different factors. Once the strategy is designed, backtested, and launched, a pure ‘quant model’ makes the buy or sell decisions.
Active - Fundamental equity	Listed equity investment strategies where the investment decision is based on human judgement. This includes bottom-up (e.g. stock-picking) and top-down (e.g. sector-based) strategies.
Fixed income	Any form of debt financing by investors to borrowers, whether through loans, bonds or any other debt instrument such as convertible bonds and notes. Borrowers can be sovereign, sub-sovereign, supranational, or corporate entities (including their subsidiaries or special-purpose vehicles).
Fixed income passive	Fixed income investment strategies and activities that mirror the performance of an index or design indices that reflect exclusions, themes, or tilts (such as weighting based on ESG factors) and follow predetermined rules that do not involve active discretionary investment forecasting and decisions.
SSA	Debt securities issued by supranational organisations (e.g. multilateral development banks or international unions), sovereigns (e.g. government bonds in any denomination), government agencies (e.g. government sponsored agency bonds, quasi-government agencies), and municipalities, sub nationals and local governments (e.g. muni bonds).
Corporate	Debt securities issued by public or private financial and non-financial companies, including banks and insurers. This includes senior or subordinated publicly listed debt, project finance, and infrastructure debt. It excludes assets in a lending portfolio, such as deposits and loans, where an organisation runs a banking division.
Securitised	Debt securities backed by asset pools and issued by special-purpose vehicles. These include asset-backed securities, mortgage-backed securities, collateralised debt or loan obligations, and covered bonds.
Private debt	Debt investments not financed by banks and not issued or traded in an open market. Private debt falls into a broader category termed alternative debt or alternative credit and is used interchangeably with direct lending, private lending and private credit. Private refers to the investment instrument and not necessarily the borrower – public companies can borrow private debt just as private companies can.
Private equity	Equity investments in privately held companies that are not traded on a stock exchange.
Venture capital	Equity investments to start-up or emerging companies. This category includes seed and early-stage capital.
Growth capital	Investments with a minority or majority stake in relatively mature companies that are looking for capital to expand or restructure operations, enter new markets, or finance a significant acquisition without a change of control of the business.
(Leveraged) buy-out	Equity investments made as part of transactions in which companies are bought from the current shareholders using financial leverage. Leveraged buyouts involve a financial sponsor agreeing to an acquisition without committing all the capital required and raising debt to fund it. The companies involved in these transactions are typically mature.
Distressed, turnaround or special situations	Equity investments in financially stressed companies, through rescue financing.
Secondaries	Acquiring direct positions in companies from existing private equity investors, typically through portfolios.
Real estate	An asset class that includes direct or indirect exposure to real property. This includes investments in non-listed real estate funds and investments in real estate companies that invest in real property.
Infrastructure	An asset class that includes direct or indirect exposure to physical or real assets. This includes electricity distribution systems, road and rail transportation, telecommunication systems or pipelines.
Hedge fund strategy	Alternative investments that use a range of investment strategies to deliver returns and manage risk. Typically offered through pooled private investment vehicles that provide limited liquidity compared to mutual funds and other investment vehicles. Hedge funds are generally only accessible to professional investors and face fewer regulatory constraints than some traditional investments.
Multi-strategy	Hedge funds that use multiple investment strategies to construct client portfolios. Often, a central decision-making team or function determines the portfolio’s exposure to the various strategies, sectors or geographies at any given time, aiming to reduce risk and volatility while taking advantage of market opportunities.
Long / short equity (strategy)	Hedge fund strategies that invest in equity and/or equity derivatives by taking long and short positions. Considerations for portfolio construction can include exposure by sector or geography, leverage, holding periods, concentrations, and valuation. Strategies can take various approaches, including focusing on growth or value stocks.
Long / short credit (strategy)	Hedge fund strategies that invest in credit and/or credit derivatives by taking long and short positions. Considerations for portfolio construction can include exposure by sector or geography, credit rating, maturity, leverage, holding periods, concentrations and valuation.
Distressed, special situations and event-driven fundamental (strategy)	Hedge fund strategies that invest in assets, securities, or other financial instruments. The returns of such strategies may be influenced by specific events, such as corporate restructuring, financial distress, mergers and acquisitions, debt, or equity issuance. These strategies may trade across the capital structure.
Structured credit	Hedge fund strategies that invest in securities and financial instruments that have exposure to an underlying stream of cash flows, such as commercial and residential mortgage loans, credit card loans, or other types of debt obligations, which have been packaged together. Structured credit instruments are also referred to as Securitisations or Asset-Backed Securities (ABS).
Global macro	Hedge fund strategies that invest in assets, securities or other financial instruments, to construct portfolios based on analysis of macro-economics trends such as currency fluctuations, interest rate changes and economic growth.
Commodity trading advisor	An organisation or individual that provides advice on the buying and selling of futures contracts, options on futures, or certain foreign-exchange contracts, often relating to commodities.
Forestry	All forms of forestry-related investments, including direct investments, forestry funds and managed investment schemes.
Farmland	All forms of farmland and agriculture-related investments, including direct investments, farmland funds and managed investment schemes.
Off-balance sheet	Assets and liabilities that do not appear on an entity’s balance sheet, but which belong to it. Off-balance sheet items are typically those not owned by, or not a direct obligation of, the company.
Investment trusts (REITs and similar publicly quoted vehicles)	Collective investment vehicles set up as listed companies, which use the money raised from issued shares to invest in assets such as shares, gilts, corporate bonds and property. Shares in investment trusts can be bought and sold in like equities.
Money market instrument	Financial instruments, generally with maturities of around one year or less. Examples include commercial paper, treasury bills, repurchase agreements, and certificates of deposit.

EXTERNALLY MANAGED ASSETS

External (investment) manager	An organisation that invests proprietary and client assets in portfolios, funds or products. Also known as an asset manager.
Investment consultant	An agent that provides advisory and consultancy services including, but not limited to, custodial services, investment policy development, strategic asset allocation, investment research, and investment manager selection, appointment and/or monitoring. Services provided do not include active investment management and fiduciary management.
Selection (external investment manager)	All actions that lead up to choosing an external investment manager, reviewing questionnaire responses, shortlisting and meeting managers.
Appointment (external investment manager)	Formalising the relationship between an investor and external investment manager by setting the investment mandate via contractual agreements, side letters, or other legal documentation. This includes setting specific goals and objectives.
Monitoring (external investment manager)	Regularly reviewing and assessing the quality of an external investment manager’s activities during the investment period.
Segregated mandate(s)	Externally managed investment portfolios run exclusively on one investor’s behalf and according to their investment mandate.
Pooled fund(s) or pooled investment(s)	Externally managed investment portfolios that aggregate assets from individual investors. Investors tend to have less influence over the investment criteria of these funds than they would in segregated mandates.

ALTERNATIVE INVESTMENTS

Standing investments (RE)	Real estate properties, also known as operating buildings, where construction work has been completed and which are owned for the purpose of leasing and producing rental income. The level of occupancy is not relevant for this definition. This definition is in line with the 2022 GRESB guidance document “Real Estate Assessment Reference Guide”.
Major renovations (and development projects) (RE)	Alterations that affect more than 50 per cent of the total building floor area or cause relocation of more than 50 per cent of regular building occupants. Major renovation projects refer to buildings that were under construction at any time during the reporting year. This definition is in line with the 2022 GRESB guidance document “Real Estate Assessment Reference Guide”.
New construction (RE)	Activities to obtain or change building or land use permissions and financing, including construction work for the project, with the intention of enhancing the property’s value. Development of new buildings and additions to existing buildings that affect usable space can be treated as new construction. New construction projects refer to buildings that were under construction at any time during the reporting year. This definition is in line with the 2021 GRESB guidance document “Real Estate Assessment Reference Guide”.
Third-party property managers	Organisations that manage all types of property assets (e.g. retail, commercial, and residential) for other organisations. They provide advice and support in a range of areas, e.g. facilities management, accounting, compliance, maintenance and utilisation.
Selection (third-party property manager)	All actions that lead up to choosing a third-party property manager, e.g. shortlisting, questionnaires and meetings.
Appointment (third-party property manager)	The formalisation of the relationship between an investor and the third-party property manager through agreements, side letters, or other documentation to establish specific goals and objectives.
Monitoring (third-party property managers)	Performance evaluation and incentives put in place for third-party property managers to employ sustainable processes in their day-to-day work. This is in line with GRESB’s definition. This definition is in line with the 2022 GRESB guidance document “Real Estate Assessment Reference Guide”.
Greenfield (INF)	An investment in a new asset that has some level of development or construction requirement and risk. This definition is in line with the 2021 GRESB guidance document “Infrastructure Fund Assessment Reference Guide”.
Brownfield (INF)	An existing asset that is operating on a standalone basis or undergoing some form of expansion. This definition is in line with the 2021 Mercer guidance document “Infrastructure investing — A primer”.
Third-party operators	Organisations that manage or maintain all types of infrastructure assets (e.g. highways, airports) for other organisations.
Selection (third-party operator)	All actions that lead up to choosing a third-party operator, e.g. shortlisting, questionnaires and meetings.
Appointment (third-party operator)	The formalisation of the relationship between an investor and the third-party operator through agreements, side letters, or other documentation to establish specific goals and objectives.
Monitoring (third-party operator)	Performance evaluation and incentives put in place for the third-party operators in its day-to-day work.
General partner / manager (GP)	An investment firm that manages pooled investment funds, usually focused on alternative assets classes, such as private equity, and is responsible for selecting and managing the investments.
Limited partners/clients (LP)	Organisations that invest in a pooled fund and do not take part in its active management. Limited partners/clients can include institutional investors, sovereign and endowment funds, family offices, and high-net-worth individuals.
Limited Partnership Agreement	Legal documentation that outlines the fundamental terms governing the operations of a fund, including the rights and responsibilities of the parties.
Side letter	An agreement entered into by the general partner (GP) and a specific limited partner (LP), clarifying and/or supplementing the terms of the fund documentation when applied to that LP.
Environmental and social management systems	A management system consisting of procedures, management commitment, delineation of roles and responsibilities, and guidance followed, to review and manage ESG factors and risks.
ESG action plan	A detailed plan outlining actions needed to manage ESG risks and opportunities. An action plan has four major elements: specific tasks: what will be done and by whom, time horizon: when will it be done, resource allocation: what specific funds are available for specific activities, and measurable outcomes. This definition is aligned with the 2022 GRESB guidance document “Real Estate Assessment Reference Guide”.
Green leases	A lease for a property that, within its terms or through an attached schedule, includes provisions that encourage the landlord, occupier, or both, to carry out their roles in a sustainable way. The details of the provisions and the means of encouraging sustainable behaviour are negotiated between the parties, but typically relate to achieving specific ESG factors, e.g. energy, water use and waste management. Clauses in green leases may also include using sustainable materials when possible, and sharing of environmental data between landlord and occupier.

CONFIDENCE-BUILDING MEASURES

Confidence-building measures	Practices that aim to make organisations and their external stakeholders more confident that the information presented in external ESG reports (e.g., PRI transparency reports) has been collected using a rigorous and robust process. Such practices range from basic internal control mechanisms to internal audit and third-party assurance.
Third-party assurance	An evaluation of an organisation’s data and/or processes against an appropriate standard, using pre-defined criteria, conducted by an independent entity or individual. This evaluation should result in a written conclusion, stating the level of confidence that the intended audience can have in the data or process.
Internal audit	An independent, objective assurance and consulting activity performed by the organisation’s internal-audit function, designed to add value and improve operations. It helps an organisation accomplish its objectives by evaluating and improving the effectiveness of risk management, control and governance processes in systematic, disciplined way.
ESG audit	The testing and verification of claims on ESG factors and sustainability outcomes for an organisation’s fund, product, or policy, by someone independent of that organisation.

ORGANISATIONAL INFORMATION

Bank	A financial institution licensed to receive deposits and make loans. Banks may also provide financial services, such as wealth management, currency exchange, and safe-deposit boxes. Commercial banks with lending activities should not sign the PRI; instead they are encouraged to sign the Principles for Responsible Banking (PRB). In the case of universal banks, PRI usually recommends signing up their asset-management or wealth-management subsidiaries.
Central bank	A public institution that manages the currency of a country or group of countries and controls the money supply. The main objective of a central bank is to maintain price stability by setting interest rates however oftentimes it invests asset for return under its own discretion. A central bank is not a commercial bank and is not motivated by profit, hence, it is considered a PRI asset owner whereas only assets invested for returns will be considered in its membership.
Corporate pension or superannuation or retirement or provident fund or plan	An organisation that manages corporate retirement and/or pension plan-related assets. The organisation may have trustees who are responsible for prudential operations, and some of the organisation’s obligations might be codified by law.
Development finance institution	A financial institution that provides equity capital, loan capital, or other forms of finance to fund activities or entities expected to contribute to economic development.
Endowment	An investment fund often used by non-profits, universities, hospitals, and churches, funded by donations that may or may not have a stated purpose in the donor’s bequest. Many non-profit organisations set up an endowment to sustain their fundraising efforts over a long period because its principal balance remains intact and the interest it generates is used for operating or fundraising purposes. The investment income from dividends is usually devoted to charitable efforts.
Execution and advisory	Services offered by wealth managers that exclude investment decision-making. Execution-only services refer to structures in which the wealth manager solely carries out the investment decisions made by the client, following the client’s instructions. Advisory services refer to structures in which the wealth manager provides investment recommendations and suggestions to the client, who makes the final investment decision.
Family office	All forms of organisations and services involved in managing large private fortunes. These can be organised either as family-owned companies, in which the family wealth is pooled, or as companies or bank departments that provide financial services for these clients while the family retains decision-making powers. Where the family office operates on behalf of one single family or where 90 per cent of the assets belong to one family, they will be considered asset owners by the PRI. Where the wealth is managed on behalf of multiple families, they will be considered investment managers by the PRI.
Fiduciary management or other outsourced discretionary fund allocation	Organisations that are appointed by or on behalf of an investor to execute their investment strategy, policy, or manager selection and some or all of the day-to-day investment decision-making and implementation.
Foundation	A charitable non-governmental non-profit organisation that usually derives its money from a family, an individual, or a corporation. Its principal fund is managed by its own trustees or directors. A private foundation generates income by investing its initial donation, often disbursing the bulk of its investment income each year to desired charitable activities.
Fund of funds, manager of managers, sub-advised products	A fund of funds (FOF), also known as a multi-manager investment, is an investment vehicle that invests in other funds. Its portfolio contains different underlying portfolios of other funds. These holdings replace any direct investment in bonds, stocks, and other types of securities. This also includes funds of hedge funds. A manager of managers (MoM) approach is a type of investment strategy oversight, whereby a manager chooses other managers for an investment program and regularly monitors their performance. A sub-advised fund is a fund managed by a management team or firm different from the one that holds the assets. A sub-advised fund may consist of specialty or niche investments for which the main fund managers seek outside expertise.
Insurance company	A financial institution that sells insurance or provides reinsurance services in the life and/or non-life insurance markets. Insurance companies are asset owners insofar as they have invested capital. This category does not include insurance consultants or insurance brokers. It does include those insurance companies that offer pension, superannuation, or retirement products, along with more conventional insurance products.
Non-corporate pension or superannuation or retirement or provident fund or plan	An organisation that manages non-corporate retirement and/or pension plan-related assets. The organisation may have trustees or members of the board who are responsible for prudential operations, and some of the organisation’s obligations might be codified by law.
Defined benefit (DB) pension scheme	A pension plan that provides a specified payment amount in retirement. Employers guarantee a specific retirement benefit amount for each participant, based on factors such as the employee’s salary and years of service. This is also commonly known as a traditional pension plan.
Defined contribution (DC) pension scheme	A pension plan that allows employees and employers (if they choose) to contribute and invest funds over time to save for retirement. These pension plans will be funded primarily by the employee, but many employers make matching contributions up to a certain amount. A specific benefit amount is not guaranteed as it depends on the contributed amounts and the performance of the investment.
Hybrid pension scheme	A mixed pension plan that includes elements of defined benefit and defined contribution. This can take many forms, such as a defined benefit scheme with a defined contribution top-up.
Reserve - sovereign or government-controlled fund	Sovereign wealth funds, treasury investment funds, stabilisation funds, and government reserve funds, including those designed to provide a potential buffer for future pensions but without defined member accounts. These funds meet one or more of the following criteria: a) more than 50 per cent of the AUM are owned by the government, b) the government has authority to appoint the board of directors and/or the CEO; and/or c) the government has direct or indirect influence on investment decisions. Development finance institutions are not included in this category.
Sovereign wealth fund	A state-owned investment fund comprised of assets generated by the government, often derived from a country’s surplus reserves, which provide a benefit for a country’s economy and its citizens.
Trade union	An organisation whose members are usually workers or employees. Trade unions seek to protect their members’ interests through collective and enterprise bargaining, mediation, and members’ representation at disciplinary or grievance hearings. Trade unions can sign up with the PRI, where they have a significant reserve fund.
Wealth manager	Organisations offering investment services that include portfolio management and financial planning services, primarily for high-net-worth individuals.