News

Educating our clients is a large part of what we do at Fulcrum Capital. We have found that terminology around sustainable investing has been a little confusing, so we put a few terms below to help give you a better understanding:

Sustainable Investing:

Industry term used to describe investments intended to generate both social and financial returns in all forms of investments including debt and equity in both public and private markets.

Environmental, Social, and Governance (ESG):

ESG factors are generally viewed in how business decisions impact customers, employees, suppliers, shareholders, and the environment. ESG factors offer portfolio managers added insight into the quality of a company’s management, culture, risk profile and other characteristics. There is growing evidence that suggests that ESG factors, when integrated into investment analysis and decision making, may offer investors potential long-term performance advantages.

Socially Responsible Investing (SRI):

A typical SRI approach uses negative screening to rule out investments in industries or companies that produce or sell harmful products or such as tobacco, alcohol, pornography, gambling, fossil fuels, and weapons. These companies may also operate in countries that pollute or violate human rights. Also referred to as “values-based investing” where the investor has unique beliefs beyond financial goals.

Impact Investing:

Investments made into companies, organizations, and funds with the intention to generate social and environmental impact alongside a financial return. Impact investments can be made in both emerging and developed markets, and target a range of returns from below market to market rate, depending upon the circumstances.

The growing impact investment market provides capital to address the world’s most pressing challenges in sectors such as sustainable agriculture, clean technology, microfinance, and affordable and accessible basic services including housing, healthcare, and education.

Mission-Related Investing (MRI):

Investments are clearly aligned with the specific mission and social beliefs of the organization. For example: the support of small businesses in a low-income neighborhood by a local community foundation.

Program-Related Investing (PRI):

A form of MRI with specific IRS definition associated with private, non-operating foundations. PRIs are the loans or capital investments a private foundation makes to further its charitable purposes. PRIs can be used to satisfy a foundation’s five percent spending requirement, however, they cannot be used to influence legislation or political campaigns.