Glossary

Sustainable and responsible investment (SRI) is an investment strategy that integrates social or environmental criteria into financial analysis and seeks to maximize both financial returns and social good. In the past, SRI stood for socially responsible investment, stemming from the concept of corporate social responsibility. However, due to a better appreciation of sustainability issues, it has become sustainable and responsible investment. SRI basically comprises both lending and investment that attempt to promote sustainability, environmental stewardship, human rights, diversity, poverty reduction, and related social concerns.

The reason behind the shift is the growing awareness of financial institutions of their social responsibilities. Both financial institutions and investors have now started to realize that due to various costs associated with the environment and social issues, the sustainability of financing is becoming more important. In the past, SRI was a niche investment but now it is becoming a mainstream part of corporate valuation. In line with the trend, in 2006 the UN developed the Principles for Responsible Investment, which embed environmental, social, and governance concepts and actions within financial institutions and across capital markets.

Sustainable development is the management and conservation of the natural resource base and the orientation of technological and institutional change in a manner that ensures the continued satisfaction of human needs for present and future generations. Such sustainable development (in the agriculture, forestry, and fishery sectors) conserves land, water, and plant and animal genetic resources and is environmentally nondegrading, technically appropriate, economically viable, and socially acceptable.

Sustainability rests on the principle that we must meet the needs of the present without compromising the ability of future generations to meet their own needs. Therefore, stewardship of both natural and human resources is of prime importance. Stewardship of human resources includes consideration of social responsibilities such as the working and living conditions of laborers, the needs of rural communities, and consumer health and safety both in the present and future. Stewardship of land and natural resources involves maintaining or enhancing this vital resource base for the long term.

A share of stock implies a share of ownership in a company. A shareholder is an individual or corporation that legally owns one or more shares of stock in a company. Companies listed on the stock market are expected to enhance their shareholders’ value.

Typically, a stockholder becomes a shareholder by purchasing either common stock (ordinary shares) or preferred stock (preferred shares). Common stock and preferred stock differ under certain conditions. Owners of common stock are entitled to vote at shareholders’ meetings, while owners of preferred stock have no voting rights. Preferred stock owners receive an annual dividend prior to common stockholders and are ranked ahead of common stock owners in the event of company liquidation.

Statistical process control (SPC) is the application of statistical tools to analyze a business process. Often SPC refers to seven analytical tools, referred to as 7QC tools:

Fishbone diagram (Ishikawa or cause-and-effect diagram)
Checklist
Control chart
Flowchart
Histogram
Pareto diagram
Scatter diagram

The literature on 7QC tools is inconsistent in its listing of the seven tools. Some lists include charts, and others include stratification. This inconsistency is not important; the real issue is that one should use the appropriate tools.

Social capital is a form of capital that contributes to productivity, business, and society. It refers to the norms, trust, and networks that form the basis of relationships in business and society. Robert Putnam defined social capital as features of social organization, such as trust, norms, and networks that can improve the efficiency of society by facilitating coordinated actions. Social norms and/or social networks are key elements of social capital, and trust is also a part of it. Social capital is widely seen as a resource that facilitates cooperation within or between groups of people. It can arise in relationships in many areas of life.