ESG stands for Environmental Social Governance, a set of standards for a company’s operations that environmentally and socially conscious investors use to screen potential investments.

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Environmental 

 

This criteria considers how a company safeguards the environment, including corporate policies addressing climate change. It can also include a company’s carbon footprint, and various other issues, such as whether toxic chemicals are used in its manufacturing processes.

 

Social

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The social criteria focuses on how a company manages relationships with employees, suppliers, customers, and the communities where it operates. These factors include everything from gender and LGBTQ+ equality to racial diversity in inclusion programs and hiring practices. 

 

Governance 

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This criteria deals with a company’s leadership, executive pay, audits, internal controls and shareholder rights. The makeup of the board of directors as well as the political contributions and lobbying activities of a company are taken into consideration.

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