Glossary

Active ownership
Proxy voting at shareholder meetings, and engagement with issuers and third party fund managers on priority themes (climate, water, nutrition, long-termism) and other material ESG issues

Best-in-class
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.

E/S (environmental or social) promotion
Seeking to increase exposure to issuers with low risks / high opportunities while decreasing / avoiding exposure to issuers with high risks / low opportunities (where applicable), exclusion framework applies, issuers with good governance in place, and active ownership carried out (where feasible).

ESG
ESG stands for Environmental (e.g. energy consumption, water usage), Social (e.g. talent attraction, supply chain management) and Governance (e.g. remuneration policies, board governance). ESG factors form the basis for the different responsible investing approaches.

ESG factors
ESG data (indicating both risks and opportunities), including sustainability risks and Principal Adverse Impacts where relevant.

ESG integration
The explicit inclusion by asset managers of ESG (Environmental, Social and Governance) risks and opportunities into traditional investment strategies based on a systematic process and appropriate research sources. It includes ESG data availability, a defined framework, ESG data usage in investment process, monitoring and disclosure of ESG role in investment process

Engagement
Investor-led dialogue with issuers on ESG matters with a view to share potential concerns, seek additional information, enhance public disclosure and/or influence behavior.

Exclusions
An approach excluding companies, countries or other issuers based on activities considered not investable. Exclusion criteria (based on norms and values) can refer to product categories (e.g. weapons, tobacco), activities (e.g. animal testing), or business practices (e.g. severe violation of human rights, corruption).

Please refer to the Pictet Asset Management’s Responsible Investment policy for details on the activities

Exclusionary / Negative Screening
An investment strategy excluding companies, countries or issuers on the grounds of activities considered as not investable. Exclusion criteria can refer to product categories (e.g. weapons, tobacco), activities (e.g. animal testing) or practices (e.g. severe violation of human rights, corruption). They can also be based on personal values (e.g. gambling) or on risk considerations (e.g. nuclear power).

Impact investing
Investments intended to generate a measurable, beneficial social and environmental impact alongside a financial return.

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.

Responsible investment
Responsible investment refers to any investment approach, integrating environmental, social and governance factors (ESG) into the selection and management of investments. There are many different forms of responsible investing, such as best-in-class investments, ESG integration, exclusionary screening, thematic investing and impact investing. They are all components of responsible investments and have played a part in its history and evolution.

Sustainable investment
An investment in an economic activity that contributes to an Environmental or Social objective, which might be aligned with the EU taxonomy (a classification system created by the European Parliament & Council, that establishes a list of environmentally sustainable economic activities). Usually measured by the % revenue contribution of the activity, given it abides by the do-no-significant-harm principle. Targeting means having sustainable investment as its main objective.

Thematic investing
Investment in businesses contributing to sustainable solutions both in environmental and/or social topics. In the environmental segment this includes investments in renewable energy, energy efficiency, clean technology, low-carbon transportation infrastructure, water treatment and resource efficiency. In the social segment this includes investments in education, health systems, poverty reduction and solutions for an ageing society.