Environmental, social, and governance (ESG) investing is a type of investment strategy that considers the environmental, social, and governance factors of a company or organization in addition to financial performance.
Environmental factors include a company’s impact on the environment, such as their carbon footprint or waste management practices. Social factors consider a company’s impact on society, including labor standards, community engagement, and diversity and inclusion policies. Governance factors refer to a company’s management structure and practices, including executive compensation, board diversity, and shareholder rights.
ESG investing seeks to invest in companies that have strong ESG practices and avoid companies with poor ESG practices. This type of investing can help promote sustainable and responsible business practices while potentially providing financial returns for investors.