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9 Must Know Terms For Climate Impact Investment

1.Corporate Social Responsibility (CSR)

A business model that requires companied to be conscious of the impact they have on all aspects of society, including in economic, social, and environmental terms.

This (should) mean that the company has a positive rather than a negative impact on the world, although as this is self-governed it can be difficulty.


2. ESG A method of analysing companies for potential investment using criteria that looks at how they behave in relation to the environment, society of the way the company is governed. The aim is to provide a list of "good" companies.

It's becoming an increasingly popular way of investing, but there are no standardised criteria, so it depends a lot on who's deciding what counts as "good".


3. Impacting Investing

An investment that looks at the specific measurable impact of a company on a particular issue e.g., climate change.

Investors can see the measurable impact of their money alongside the financial returns.


4. Socially Responsible Investing (SRI)

An investment selected on the basis of specific ethical guidelines.

SRI investment tackle one particular issue and are binary, so, for instance, might exclude any company that tests in animals or has links to gambling.


5. Greenwashing

A phrase used to describe a company making efforts to appear environmentally conscious, often for marketing purposes, but without a proper commitment to addressing its carbon footprint.


6. Bear Market

To be fully equipped with all the necessary investment knowledge as a climate impact investor, you need to know some basics too:

Bear Market is the financial term for when a stock experiences a substantial drop in value (generally 20% or more) for a prolonged period (normally 2 months or longer).

During a bear market, investors generally have low levels of trust in their investments, and there are more people selling than buying.


7.  Bull Market

A bull market is the opposite of a bear, market referring to a period of prosperity for stock markets. This is measured as values rising over 20% of a period of at least 2 months. During a bull market-investors are positive, and process rise because there is a lot of demand for stock to buy.


8. Compound Interest

The Money you earn on the money you earn.

For example, if your €10 investment earns you a 20% return each year, the following year you’ll earn 20% on €12, and the year after that you'll earn 20% on €14.40.

Compound interest rewards those who invest early over a long period of time.


9. Index

A measure of how the stock market is performing, by taking a sample of stocks. By measuring what these stocks are doing, you can get a good understanding of what all stocks are doing and the direction the market is moving. The Nasdaq and S&P 500 are two of the largest US indices.

There even exists a Vega index called VedTech that tracks the global list of plant-based stocks.

In investment terms, when people talk about "the market is up 50 points" they are often referring to one of these indices.