Discover key terms and concepts in sustainable finance with this comprehensive glossary, designed to guide you through the essentials of socially responsible investing.

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Rusudan Buachidze, 36 years old, economist, handing money to her bussiness partner.
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Blended finance

Blended finance is the strategic use of development finance for the mobilization of commercial finance towards sustainable development in developing countries.

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Bond

bond is a fixed income investment vehicle. A loan made by an investor to a borrower, with a fixed or variable periodic interest rate and a date on which the loan principal is due. Bonds are issued by borrowers in private placement or public offering transactions and traded in over-the-counter markets or via listing on public markets exchanges.

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ESG (Environmental, Social, and Governance)

ESG (Environmental, Social, and Governance) is an investment method that shareholders and institutional investors consider with the company’s financial factors in terms of “sustainable investment” when making investment decisions in a company, reflecting social and ethical values and eco-friendly sustainability.

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Impact investing

Impact investments are investments made with the intention to generate positive, measurable 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 on investors' strategic goals.

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Thematic bonds

Thematic bonds are traditional fixed income instruments which allow investors to finance specific investment themes such as climate change, health, food, education, access to financial services and target specific Sustainable Development Goals (SDGs) through investing.

Gender bond:  are a type of sustainable bond to credibly access financing for projects and strategies that advance gender equality and women's empowerment, contributing to the achievement of Sustainable Development Goal (SDG) 5. They are issued by governments, development banks, or private entities with the goals to empower women in leadership, employment, supply chain, productivity or services and communities, or to achieve a life free of violence, socioeconomic advancement and empowerment, and redistribute and reduce unpaid care and domestic work for women.

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Social bonds

Social bonds are any type of bond instrument that exclusively applies the proceeds, or an equivalent amount, to finance or re-finance, in part, or in full, new or existing eligible Social Projects that align with the four core components of the Social Bond Principles: i) Use of Proceeds; ii) A Process for Project Evaluation and Selection; iii) Management of the Proceeds; and iv) Reporting.

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Sustainability bonds

Sustainability bonds are bonds that exclusively apply the proceeds to finance or re-finance a combination of both Green and Social Projects. Sustainability Bonds align with the four core components of both the Green Bond Principles and the Social Bond Principles. The Green Bond Principles is especially relevant for Green Projects, and the  Social Bond Principles for Social Projects.

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Sustainability-linked bonds

Sustainability-linked bonds are any type of bond instrument for which the financial and/or structural characteristics can vary depending on whether the issuer achieves predefined Sustainability/ environmental, social, and governance (ESG) objectives.

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Principles of responsible banking

The principles for responsible banking are a framework developed by UNEP FI are six principles (alignment, target setting, clients and customers, stakeholders, governance and culture, transparency and accountability) infuse purpose and ambition into sustainable finance, shaping member banks' operations, portfolios and engagements with clients and stakeholders.

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Principals of responsible investing

Responsible investments involve considering environmental, social and governance (ESG) issues when making investment decisions and influencing companies or assets (known as active ownership or stewardship). It complements traditional financial analysis and portfolio construction techniques.

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Glossary