United StatesIn business and finance, the words we choose shape how people think, act and invest.
Misunderstandings caused by language can have devastating consequences. When British and American officials ‘table’ an idea, one expects it to be discussed, while the other expects it to be dropped. The same word, opposite meaning. In 1977, a misunderstanding between a Dutch pilot and a Spanish air traffic controller speaking English led to tragedy on the runway at Tenerife – the deadliest air crash in history, killing 583 people.
Language can kill; in finance, it can erode trust and confuse everyone.
Calling time on unhelpful terms
For decades, most investors had a straightforward aim: to achieve the best risk-adjusted returns. A small minority chose to narrow their investment scope to reflect personal values – for example avoiding companies linked to the Vietnam War.
Around the turn of the millennium, scandals such as Enron and WorldCom shook the financial world. This wasn’t just egregious corporate malpractice; they challenged the very meaning of fiduciary duty. Beyond narrow legal constraints, were there any behavioural limits for those managing money on behalf of others?
Subsequently, the essential tightening of corporate governance standards was accompanied by pressure from some quarters to tilt the allocation of capital towards solving environmental and social problems, even at the expense of returns. Terms such as ‘responsible investing’ and ‘impact investing’ have become widely used, typically without clarity on whether ‘potentially lower financial returns’ are implicit.
It should be obvious that sharp definitions in this area are fanciful. After all, the distinction between ‘green’ and ‘not green’ is not black-and-white!
After years of overuse, misuse and misinterpretation, many in finance are calling time on unhelpful terms and acronyms, in favour of less ambiguous language. And the UK government has chosen not to introduce a ‘green taxonomy’, rightfully wary of the complexity and the politics that such classifications inevitably entail.1
This reassessment is both healthy and overdue. It reflects a desire to reconnect investing with its core purpose: allocating capital effectively to generate returns while taking account of real-world risks.
Articulating opportunities with clarity
Abandoning ambiguous language must not, however, morph into a rejection of unstoppable economic transformations that are driving the shift towards cleaner, more efficient products and services. But politics and vested interests often interfere.
For example, the US President has recently pledged to penalise shipping companies that use cleaner fuels, even as customers increasingly demand low-pollution logistics.2 In the UK and continental Europe, planning permission for infrastructure that will reduce pollution is often delayed or rejected on spurious grounds by local government bodies.3 And energy lobbies continue to fund political pressure against renewables, despite evidence of the extraordinary, sustained growth for electricity.4
Investors and business leaders have a duty to communicate transparently with those whose capital they deploy. The shift toward less polluting, more efficient goods and services is, in many cases, economically compelling and highly attractive for investors. But not every ‘green’ or ‘impact’ venture will produce competitive financial returns.
Some technologies will only become competitive with sustained, well-designed government support, as solar and wind power did. But others will remain uneconomic for decades, if not forever. Even many experienced investors struggle to tell which is which.
That is why clarity from capital allocators matters. Asset owners must be clearly informed in advance if those managing their funds intend to pursue social or environmental objectives alongside purely financial ones. Ambiguity helps no one: it masks trade-offs, invites political backlash, and can ultimately make beneficiaries such as pensioners poorer. Capitalists should resist the temptation to rebrand marginal investment ideas as virtue or to disguise speculative bets as moral commitments.
Retaining legitimacy in a polarised climate
It is vital to re-establish the boundary between investment and values or ethics. The goal is not to deter investment in commercially viable improvements to the environment or social fabric, but to ensure that language reflects purpose and trade-offs. Investors can help their clients understand long-term risks such as climate change and opportunities like energy-efficient real estate – whether those clients are seeking to reflect their ethical or political views can be discussed upfront.
The first step is linguistic discipline. As George Orwell warned, “The slovenliness of our language makes it easier for us to have foolish thoughts”.5 If businesses and investors are to retain legitimacy in a world of rising political polarisation, they must be more careful to say exactly what they mean.
1 HM Treasury, July 2025: UK Green Taxonomy Consultation Response
2 Tunagur, E., 13 October 2025: UN shipping emissions deal to pit US against EU-led bloc. Reuters
3 Durham Energy Institute, July 2025: Pylon wars show why big energy plans need locals on board
4 IEA, 2025
5 Orwell, G., 1946: Politics and the English Language
References to specific securities are for illustrative purposes only and should not be considered as a recommendation to buy or sell. Nothing presented herein is intended to constitute investment advice and no investment decision should be made solely based on this information. Nothing presented should be construed as a recommendation to purchase or sell a particular type of security or follow any investment technique or strategy. Information presented herein reflects Impax Asset Management’s views at a particular time. Such views are subject to change at any point and Impax Asset Management shall not be obligated to provide any notice. Any forward-looking statements or forecasts are based on assumptions and actual results are expected to vary. While Impax Asset Management has used reasonable efforts to obtain information from reliable sources, we make no representations or warranties as to the accuracy, reliability or completeness of third-party information presented herein. No guarantee of investment performance is being provided and no inference to the contrary should be made.