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Institute of International Finance proposes simplified terminology for categorising sustainable investments

The Institute of International Finance (IIF) has proposed an industry-wide simplification of terminology around sustainable investment, in order to help scale up sustainable finance. The IIF have released a report that recommends three categories for sustainable investment products:

  1. “Exclusion” investments: those actively avoiding investing in unsustainable corporates or countries
  2. “Inclusion” investments: those actively investing in sustainable corporates or countries
  3. “Impactful investments”: those seeking to have a direct, positive measurable impact on society and/or the environment, while also targeting market or better returns.

The report differentiates investments that are willing to earn sub market financial returns in order to have a direct positive impact on society and/or the environment, labelling these “Philanthropic” investments and recommending that they be placed in a separate category distinct from sustainable investment.