You are not alone. It is useful to understand that different terms have evolved in different contexts to help explain the same set of practices.  

Definition of Responsible Investing  

According to the Principles for Responsible Investment (PRI), Responsible investment involves 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. 

RI can further be defined as investment management processes and ownership practices that take material environmental, social and corporate governance (ESG) considerations into account in the belief that these factors can have an impact on long-term financial performance. Hence this tool uses the term Responsible Investment and ESG-integrated investment interchangeably. 

The core objective of RI is to act in the best interests of ultimate beneficiaries such as pension fund members by recognising that ESG factors can create investment risks and opportunities. They must therefore be considered in all investment decisions. 

It also means that pension funds should not be ‘absentee landlords’ with respect to the companies and other assets that they own, but rather act as active stewards of their investments.  

Definition of Sustainable Finance 

Sustainable finance has emerged as an overarching term to include a wide array of practices and concepts. 

In 2021, National Treasury published a technical paper: Financing a Sustainable Economy. It includes the following helpful definitions: 

Sustainable finance contributes to the delivery of the sustainable development goals, and a just transition to a low carbon and climate resilient economy and financial stability. Sustainable finance encompasses financial models, services, products, markets and ethical practices to deliver resilience and long-term value in each of the economic, environmental, social and governance aspects.  

This is achieved when the financial sector: Evaluates portfolio and transaction-level environmental and social risk exposure and opportunities, using science-based methodologies and best practice norms, disclosures and mitigates these risks and links these to products, activities and capital allocations.