Glossary

    Please contribute with your definitions!

     

    A

    Asset class: a group of securities that exhibits similar characteristics, behaves similarly in the marketplace and is subject to the same laws and regulations. The three main asset classes are equities, or stocks; fixed income, or bonds; and cash equivalents, or money market instruments.

     

    B

    Blended finance: strategic use of development finance and philanthropic funds to mobilize private capital flows to emerging and frontier markets.

     

    Bond: debt investment in which an investor loans money to an entity (typically corporate or governmental), which borrows the funds for a defined period at a variable or fixed interest rate. Bonds are used by companies, municipalities, states and sovereign governments to raise money and finance a variety of projects and activities. Owners of bonds are debtholders, or creditors, of the issuer.

     

    C

    Catalytic first-loss capital[1]:  socially- and environmentally-driven credit enhancement provided by an investor or grant-maker who agrees to bear first losses in an investment in order to catalyze the participation of co-investors that otherwise would not have entered the deal.

     

     

    E

     

    Equity: a stock or any other security representing an ownership interest. This may be in a private company (not publicly traded), in which case it is called private equity. Investment vehicle refers to any method by which individuals or businesses can invest and, ideally, grow their money.

     

    G

    Green finance[2]: financial investments flowing into sustainable development projects and initiatives, environmental products, and policies that encourage the development of a more sustainable economy. Green finance includes climate finance, but is not limited to it. It also refers to a wider range of other environmental objectives, such as industrial pollution control, water sanitation or biodiversity protection.

     

     

    I

    Impact investments: investments made with the goal of financial returns, as well as yielding positive social and/or environmental benefits.

     

    L

    Loan/credit guarantee: a guarantee made by a government or multilateral (or any third party) to pay the lender.

     

    P

    Payment for ecosystem services[3]a voluntary transaction in which a  well-defined environmental service (ES) or a form of land use likely to secure that service is bought by at least one ES buyer from a minimum of one ES provider, if and only if, the provider continues to supply that service (conditionality).

     

    S

    Security: a financial instrument that represents an ownership position in a publicly-traded corporation (stock), a creditor relationship with governmental body or a corporation (bond) or rights to ownership as represented by an option.

     

    Subordinated debt: a loan or security that ranks below other loans and securities with regard to claims on a company's assets or earnings. Subordinated debt is also known as a junior security or subordinated loan. In the case of borrower default, creditors who own subordinated debt won't be paid out until after senior debtholders are paid in full.

     


     

        

         

         

    [3] Wunder, S. 2005. “Payment for environmental services: Some nuts and bolts.”