The Investment Association (IA) has published a set of definitions for responsible investment aimed at creating a common language that describes and categorises ESG investment approaches and products.

The definitions have been put together following a consultation run by the IA with over 40 investment management firms who represent £5trn of assets.

Investment managers are encouraged to adopt the definitions, which reflect the wide range of responsible investment approaches, including commonly-used terms such as: ESG integration, stewardship, impact investing, exclusions and sustainability focus.

Currently, a variety of terms and phrases are used in different ways to describe responsible investment products and strategies.

The IA says that these could leave savers confused or unable to find the investment opportunities to match their diverse responsible investment goals.

It hopes that the set of definitions will help savers better access and compare funds with a focus on environmental or social outcomes.

IA chief executive, Chris Cumming, said: “Today’s savers want to understand the impact of their investments on the world around them.

"One significant barrier to the growth of responsible investment has been the lack of a common language and framework that describes and categorises these approaches and products.

"The agreement of industry-wide definitions provides consumers with that much-needed clarity and choice.”

He added that the investment management industry could now give its customers a clear picture of the opportunities available to them and the confidence that their chosen product matches their expectations.

“This is a new milestone in making it easy for people to choose a responsible investment,” said Cummings.

From the start of next year IA members will also be asked to identify which funds should be classified as having responsible investment characteristics. The IA says that it will publish statistics on funds with responsible investment characteristics later in 2020.

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