ESG (ENVIRONMENT – SOCIAL – GOVERNANCE)

Environmental, Social and Governance (‘ESG’) refers to being complaint to the three key factors when measuring the sustainability and ethical impact of an investment in a business or company. ESG weeds out unsustainable companies with outdated practices and harmful side effects, while also minimizing risk for investors as they invest in more responsible companies with a greater likelihood of succeeding in the long run.

E is for Environmental; S is for social, and G is for corporate Governance. The environmental component requires research into a variety of elements that illustrate a company’s impact on the earth. Social consists of people-related elements like company culture. The corporate governance component relates to the board of directors and company oversight.

ESG investing applies a positive screening approach when selecting investments; assessing and rating companies on whether their practices, production and overall business models demonstrate a positive trend to comply with ESG principles.