Glossary

Product categories related to the SFDR Regulation (see definition 'SFDR’).

PMI indicator of the strength of the Chinese economy.

The Conference Board is a non-profit organization, created in the early 19th century, that compiles data from numerous economic sources.

A controversy refers to a company's involvement in incidents related to ESG factors. This may include, for example, an oil spill, child labor exploitation, human rights violations or fraud.

Directive (EU) 2022/2464, also known as 'CSRD' (Corporate Sustainability Reporting Directive), will replace the European NFRD (Non-Financial Reporting Directive) from January 1, 2024. The latter currently governs the extra-financial performance statements of European companies. The CSRD will aim to harmonize non-financial information by imposing common reporting standards based on existing international standards, such as those established by the GRI (Global Reporting Initiative) and the TCFD (Task Force on Climate-related Financial Disclosures). Through this harmonization, investors and other stakeholders will be able to analyze and compare the information provided by companies more easily.

Instrument used to correct an economic measure for the effects of inflation so that prices corresponding to different years can be compared. Price deflator is a ratio of price levels in two different years that accounts for inflation in the prices of goods and services so that comparisons can be made from one year to another.

European Central Bank.

By investing in a company, an investor holds voting rights at general meetings. As part of an engagement approach, the asset management company seeks to exert influence on companies on ESG issues through dialogue initiatives or by voting on resolutions.

Environmental, Social and Governance (ESG) criteria constitute the three pillars of extra-financial analysis that are taken into account in the responsible management of financial actors. It involves assessing the exercise of corporate responsibility with regard to safeguarding the environment and their stakeholders.

The ESG rating is the assessment of companies on environmental, social and governance criteria, carried out based on information communicated by companies via their annual report or their responses to ESG questionnaires. Each rating agency has its own methodology for calculating the ESG rating.

In addition, asset managers, such as Lazard Frères Gestion, can rate companies internally with their own methodology.

Classification aimed at harmonizing the term “green activity”. It establishes minimum criteria that economic activities must meet in order to be considered environmentally sustainable.

It aims to facilitate investments in environmentally friendly projects and support the transition to a carbon-neutral economy by 2050. The taxonomy is based on six key environmental objectives:

• Climate change mitigation
• Climate change adaptation
• Sustainable use and protection of water and marine resources
• Transition to a circular economy
• Pollution prevention and control
• Protection and restoration of biodiversity and ecosystems

For an economic activity to be considered sustainable according to the European green taxonomy, it must contribute significantly to one of these environmental objectives, without causing significant harm to the other objectives. In addition, it must comply with certain minimum standards, such as requirements relating to human rights and corporate governance.

Extra-financial criteria complement purely financial analysis by investors in order to define sustainable investments.

• Principal Adverse Impacts on sustainability factors (PAI): The most significant negative impacts of investment decisions on sustainability factors related to environmental, social and employee matters, respect for human rights and anti-corruption issues.
• Sustainability factors: Environmental, social and employee matters, respect for human rights and anti-corruption.
• Controversy: A controversy refers to a company's involvement in incidents related to ESG factors. This may include, for example, an oil spill, child labor exploitation, human rights violations or fraud.
• Do No Significant Harm (DNSH) principle: The application of the DNSH principle requires that no significant harm be caused to environmental and social objectives. The European Taxonomy defines six criteria to which investments must not cause significant harm.

The Federal Reserve of the United States, i.e., the central bank of the United States.

Fonds monétaire international. Institution chargée de promouvoir la coopération monétaire internationale, garantir la stabilité financière, faciliter les échanges internationaux, contribuer à un niveau élevé d’emploi, à la stabilité économique et faire reculer la pauvreté.

Gross Domestic Product, indicator of the wealth produced by a country. Main economic indicator for measuring economic production achieved within a given country.

Bond loans aimed at financing projects related to sustainable development. They may be issued by companies, states or other public entities.

The green bond market was created in 2007, when the European Investment Bank (EIB) issued its first “Climate Awareness Bond”. Today it represents more than 50% of sustainable issues. Green bonds must comply with the Green Bond Principles.

Index showing the evolution of economic conditions in Germany.

International Monetary Fund. Institution responsible for promoting international monetary cooperation, ensuring financial stability, facilitating international trade, contributing to a high level of employment and economic stability, and reducing poverty.

As defined by the Global Impact Investing Network, “impact investment is an investment made with the intention of generating a positive return, having a measurable social and environmental impact, while ensuring a financial return”.

• Intentionality: the explicit pursuit of a positive social or environmental impact
• Additionality: the investor's engagement and contribution enabling the company to maximize its impact
• Measurability: impact measurement based on objectives, monitoring and continuous evaluation

Published monthly by the Institute for Supply Management, this index is divided into two main categories: ISM Manufacturing and ISM Services. It monitors changes in production levels from month to month.

The Job Openings and Labor Turnover Survey enables interpretation of the state of the US labor market by surveying companies on job openings as well as hiring or layoff prospects.

Entered into force on August 2, 2022, Delegated Regulation (EU) 2021/1253 introduces sustainability preferences into the MiFID 2 framework.

It requires financial intermediaries to take into account their clients' ESG preferences and adjust portfolios accordingly, increasing transparency and alignment with the European green taxonomy.

All means of payment in a nation. Several aggregates are distinguished:

• M1 = Banknotes and coins + demand deposits
• M2 = M1 + sight deposits 
• M3 = M2 + highly liquid investments
• M4 = M3 + commercial paper and Treasury bills

Housing market indicator relating to current and future new home sales and the number of potential buyers.

Situation in which CO₂ emissions from human activity are offset globally by anthropogenic CO₂ removals. Net negative emissions occur when removals exceed emissions.

The Organisation for Economic Co-operation and Development.

Purchasing Managers Index. Confidence indicator based on surveys among purchasing managers. A value above 50 indicates expansion in the sector concerned.

Perimeters used when calculating carbon footprints:

• Scope 1: direct emissions
  
• Scope 2: indirect emissions from electricity and heat
• Scope 3: other indirect upstream and downstream emissions

Entered into application on March 10, 2021, the Sustainable Finance Disclosure Regulation provides a framework for reporting on financial products and defines sustainable investment.

It defines three classes of financial products:

• Article 6: no ESG promotion, may integrate sustainability risks
• Article 8: promote environmental and/or social characteristics
• Article 9: have sustainable investment as their objective

In January 2023, new Regulatory Technical Standards clarified definitions and disclosure methodologies.

Label created in 2016 by the French Ministry of Economy and Finance to identify funds implementing a robust socially responsible investment methodology. Issued by an approved body and subject to annual audit.

Debt securities where the interest rate depends on achieving predefined environmental and/or social objectives. Failure to meet objectives results in a coupon increase.

Set of financial initiatives integrating ESG criteria to promote energy and ecological transition. Includes SRI, green finance, solidarity finance and social business.