While this Notice uses the term “ESG”, there are other related terms that are commonly used by ESG-Related Funds and more broadly throughout the investment fund industry. Those terms include the following:
- sustainable
- responsible investing or RI
- socially responsible investing or SRI
- ethical
- green
ESG-Related Funds generally consider ESG factors in their investment decision-making processes. However, they may focus on only one or two of the three areas of ESG and may even have a concentrated focus on one or a small group of factors in any of the are as of ESG (e.g. a fund that is focused only on improving or promoting board diversity). For illustrative purposes, the following is a non-exhaustive list of ESG factors that may be considered by such funds in their investment decision-making processes:
| Environmental | Social | Governance |
|---|---|---|
| Air and water pollution | Community relations | Audit committee structure |
| Biodiversity | Data protection and privacy | Board diversity |
| Climate change and carbon emissions | Diversity | Bribery and corruption |
| Deforestation | Employee engagement | Executive compensation |
| Energy efficiency | Human rights | Lobbying |
| Waste management | Indigenous inclusion and reconciliation 1 | Political contributions |
| Water scarcity | Labour standards | Whistleblower schemes |
1 Some stakeholders are of the view that, given the importance of Indigenous inclusion and reconciliation in Canada, the concept of “ESG” should be expanded to “ESGI”, with Indigenous inclusion and reconciliation being included as a separate area.