What is ESG investing?
Environmental, Social and Governance, ESG in short, refers to a subset of nonfinancial performance indicators, which encompass sustainable, ethical and governance issues. ESG factors can be used to evaluate corporate behaviour and to determine the long-term financial performance prospects of a company.
Increasingly, socially conscious investors are using ESG factors to screen potential investments. Environmental criteria look at how a company performs as a guardian for the environment, for example their impact on climate change or carbon emissions, water use or conservation efforts. Social criteria focus on a company’s ability to manage relationships with its employees, clients, suppliers and the local communities in which it operates. Governance examines a company’s leadership, shareholder rights, audits and internal controls, anti-corruption policies, board diversity, executive pay and human rights efforts, for example.
Many larger firms are beginning to track their ESG progress as ESG-minded business practices are gaining traction. In the financial services sector, firms such as Wells Fargo, JPMorgan Chase and Goldman Sachs have released annual reports reviewing their approaches to ESG.
THE VALUE OF INVESTMENTS AND THE INCOME FROM THEM CAN GO DOWN. YOU MAY NOT GET BACK THE ORIGINAL AMOUNT INVESTED