Mark Armstrong has a rigorous process when it comes to sustainable investing, as he looks to assemble stocks that have a true impact.
The founder of Blue Sphere said the advice firm did not stop at ESG screening "because we don't believe it's good enough".
Instead it follows a three-layer process that allows it to screen out companies not deemed 'ethical' before screening out those that don't meet environmental, social and governance principles.
It also screens in stocks that have a positive social or environmental impact.
This is called impact investing.
"We really, truly believe - and when we speak to clients [about] what they think ethical or ESG investing is - it's actually impact investing they're seeking, not ethical or ESG," said Armstrong.
Research from Boring Money carried out this year showed conviction, or impact, investing has become a priority for many investors in the UK, as 14 per cent of ESG investors are now so committed to sustainable investing they put ESG criteria first and performance second when selecting investments.
But Armstrong said there were still hurdles to jump in communicating impact investing to clients, as there was not yet a consensus on the right terminology to use.
"Ethical and ESG is the banner that the industry uses a lot and is in a lot of people's language. But what they're actually talking about is impact," he said.
"They want to invest in a way that not only provides them with a financial return but also is having a positive, measurable social and environmental impact."
And it's not just clients who get confused by the terminology, the industry too was taking ESG to mean a variety of different things, he said.
"We really need to define what we mean by ESG. Are we looking at how the company affects the environment, ...or are we looking at it from how the environment affects the company's profits moving forward?"
The common end result of confusing terminology is what many refer to as greenwashing. Although for Armstrong greenwashing is "lying", for others it doesn't always have to be intentional.
As ESG veteran Julia Dreblow, director of SRI Services, told FTAdviser: "Some greenwash allegations result from differences in opinion, and sometimes greenwash is simply overexuberant marketing borne of inexperience."
She added: "There are funds that have shocked me, where it seems unlikely that over-exaggeration was accidental, and some fund names should be changed - but such examples are in the minority."
The problem often presents when there are so-called ESG funds that have stakes in companies such as oil producers.
Some ESG investors believe there is merit in helping non-ESG companies transition to a greener business model, which can be an ESG strategy in itself.
But for Armstrong, companies such as oil producers or mining firms are unlikely to make the cut, unless they transition away from fossil fuels completely.
