Let’s look at environmental, social and governance (ESG)

Environmental, Social, and Governance (ESG) are three factors that are used to evaluate the sustainability and ethical impact of a company’s operations.

Environmental factors refer to a company’s impact on the natural environment, including its use of natural resources, greenhouse gas emissions, waste generation, and other forms of pollution. ESG investors look for companies that prioritize sustainability, reducing their environmental footprint, and implementing green initiatives.

Social factors refer to a company’s impact on society, including its relationships with employees, customers, suppliers, and the broader community. ESG investors look for companies that have a positive social impact, such as those that treat their employees fairly, have diverse and inclusive workplaces, and contribute to their communities.

Governance factors refer to a company’s system of management and oversight, including its board of directors, executive compensation, and internal controls. ESG investors look for companies that prioritize good governance practices, such as transparent reporting, strong risk management, and independent board oversight.

By considering these three factors, ESG investors aim to identify companies that are well-managed, financially sound, and have a positive impact on the world. ESG investing has gained popularity in recent years as investors increasingly prioritize sustainability and ethical considerations alongside financial returns.