ESG (‘environmental, social, governance’)

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ESG is an acronym for the three central factors used by responsible investors to screen and select companies and other investments for their portfolios.

You’ll find that the terms ‘environmental’ and ‘social’ may sometimes be replaced by ‘ethical’ and ‘sustainable’. Using ESG factors does not automatically mean a fund or investment portfolio is ‘sustainable’ or ‘ethical’, so you should always do your research first.

Examples of what ESG factors cover vary but they can include climate change, health and safety in the working environment and protecting the interests of shareholders.


CFA Institute: ESG Investing and Analysis