Definition
ESG investing incorporates environmental (climate, pollution), social (labor practices, diversity), and governance (board structure, executive pay) criteria into investment analysis. It aims to identify companies with sustainable practices and avoid those with poor ESG profiles. Growing evidence suggests ESG factors can impact long-term financial performance.
Example
An ESG fund excludes oil companies and tobacco while overweighting firms with strong diversity policies and clean energy exposure.
FAQ
What is ESG Investing?
Investment approach considering environmental, social, and governance factors.
Why is ESG Investing important?
ESG Investing helps investors evaluate ESG and make more informed decisions.