Glossary

De-jargoned: Glossary of ESG terms

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There are currently 15 relevant ESG terms in this directory beginning with the letter P.
Passive Investors
Investors that attempt to generate returns that mirror the returns of a predetermined market index. Passive investors tend to be less attentive to firm-specific performance and governance issues. [Source: Stanford: Corporate Governance Research Initiative]

Pay for Performance
A term used to describe the relationship between executive compensation and corporate performance over a specified measurement period. “High” pay for performance indicates that compensation is both correlated with and appropriate in size given company performance. [Source: Stanford: Corporate Governance Research Initiative]

Plurality Voting
A system for proxy voting under which the director who receives the most votes wins. In an uncontested election, a director is elected as long as he or she receives at least one vote. [Source: Stanford: Corporate Governance Research Initiative]

Poison Pill
A common antitakeover defense (implemented through shareholder's rights plan) in which a company threatens to flood the market with new shares to prevent a hostile takeover. The “poison pill” is triggered if a shareholder or shareholder group accumulates an ownership position above a threshold level (typically 15 to 20 percent of shares outstanding). Once this threshold is exceeded, existing shareholders are offered the right to buy new shares at a steep discount to the current price. The flood of new shares associated with the rights plan dilute the would-be acquirer’s holdings and make it prohibitively expensive for the acquirer to take control of the firm through open market purchases or a tender offer. [Source: Stanford: Corporate Governance Research Initiative]

Portfolio Carbon Footprint
An aggregation of the carbon footprint of individual positions within an investment portfolio, relative to the share of the companies held by this portfolio. As a measure to assess the climate risk of an investment portfolio, this key performance indicator is used by institutional investors aiming to offer transparency and reduce the carbon intensity of their portfolios. [Source: Swiss Sustainable Finance]

Positive Screening
Investment approach based on a sustainability rating in which a company's or issuer's environmental, social and governance (ESG) performance is compared with the ESG performance of its sector peers. All companies with a rating above a defined threshold are considered as investable. The threshold can be set at different levels (i.e. 30% best companies eligible). “Buy” lists may include enterprises with, for example, good employer-employee relations, strong environmental practices, products that are safe and useful, and operations that respect human rights around the world. Positive screening is also known as 'Best in class'. [Source: First Affirmative Financial Network]

PPP - Public Private Partnership
Typically medium to long-term arrangements between the public and private sectors, whereby some of the service obligations of the public sector are provided by the private sector, with clear agreement on shared objectives for delivery of public infrastructure and/or public services. In the finance context, PPPs often form the basis for long-term investments by the private sector in infrastructure or other services of the public domain. [Source: Swiss Sustainable Finance]

Preferred Stock
Preferred stock is a class of stock that is senior to common stock in terms of credit and capital. [Source: Stanford: Corporate Governance Research Initiative]

Proxy Access
The practice of allowing shareholders or groups of shareholders to directly nominate board candidates through the company proxy. [Source: Stanford: Corporate Governance Research Initiative]

Proxy Advisory Firms
Third-party firms that evaluate management- and shareholder-sponsored proposals on the annual proxy and provide recommendations on how investors should vote. [Source: Stanford: Corporate Governance Research Initiative]

Proxy Contest
A situation in which a corporate raider or other activist nominates a slate of directors (known as the “dissident slate”) to run in opposition to the directors that the company has nominated. Proxy contests tend to occur in hostile takeovers or when an activist shareholder with a significant minority position wishes to impose greater change on a company or force a sale. [Source: Stanford: Corporate Governance Research Initiative]

Proxy Voting
A ballot cast by one person on behalf of another. One of the benefits of being a shareholder is the right to vote on certain corporate matters. Since most shareholders cannot, or do not want to, attend the annual and special meetings at which the voting occurs, corporations provide shareholders with the option to cast a proxy vote. Shareholders receive a proxy ballot in the mail along with an informational booklet called a proxy statement describing the issues to be voted on. Shareholders return a form by mail agreeing to have their vote cast by proxy. [Source: Swiss Sustainable Finance]

PSI - Principles for Sustainable Insurance
Launched by UNEP FI in 2012, The Principles for Sustainable Insurance (PSI) serve as a global framework for the insurance industry to address environmental, social and governance risks and opportunities. The purpose of the PSI Initiative is to better understand, prevent and reduce environmental, social and governance risks, and better manage opportunities to provide quality and reliable risk protection. [Source: Swiss Sustainable Finance]

Public Pension Funds
Pension funds that manage retirement assets on behalf of state, county, and municipal governments. Beneficiaries primarily include public employees who are covered by a collective bargaining agreement [Source: Stanford: Corporate Governance Research Initiative]

Pyramidal Business Groups
Two or more listed firms under a common controlling shareholder that holds a significant minority position in each (at least 10 percent). [Source: Stanford: Corporate Governance Research Initiative]

Sources:

  1. Allianz Global Investors, ESG Glossary, Retrieved: September 12,2020
  2. First Affirmative Financial Network, Glossary of Responsible Investing Terms, Retrieved: September 12,2020
  3. Global Affairs Associates, ESG Glossary, Retrieved: September 12,2020
  4. Invesco Ltd., Glossary: Understanding ESG jargon, Retrieved: September 12,2020
  5. Nuveen, LLC., Glossary: Responsible investing, Retrieved: September 12,2020
  6. Schroders Investment Management North America Inc., Understanding sustainable investment and ESG investment terms, Retrieved: September 12,2020
  7. Stanford Graduate School of Business, Corporate Governance Research Initiative, Retrieved: September 12,2020
  8. Swiss Sustainable Finance, Glossary, Retrieved: September 12,2020

Disclaimer: This glossary is NOT intended to be an authoritative reference document. All information in this glossary is for educational use only. This glossary has been compiled based on public domain information available on the websites of the mentioned sources. While due care has been taken in compiling this glossary, ESGSense does not assume any liability for any inaccuracy or factual error. Any term or definition mentioned here does NOT constitute financial or investment advice. ESGSense assumes no liability for any financial decisions and/or investments made on the basis of information gained from this glossary.