ESG (Environmental, Social, and Governance) Factors
Criteria used to measure the sustainability and societal impact of an investment in a company, which can affect its financial performance and risk profile.
Implications
Criteria used by investors and companies to evaluate the sustainability and ethical impact of a business, focusing on areas like environmental responsibility, social impact, and corporate governance, increasingly important in investment decisions and corporate strategy.
Example
Example: A pension fund prioritizes ESG factors in its investment strategy, choosing to invest in companies with strong environmental practices, fair labor policies, and transparent governance structures.
Related Terms
Different from traditional financial metrics, which focus on profitability and risk, ESG factors assess the broader impact of a company�s operations on society and the environment.
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