Why is ESG essential to humanity?

An introductory guide to Responsible Investment

Overview

What is ESG (Environmental, Social, and Governance)?

ESG is the acronym for Environmental, Social, and (Corporate) Governance, the three broad categories of interest for what is termed “Responsible Investment (RI).” They are investors who consider it important to incorporate their values and concerns (such as social or environmental concerns) into their selection of investments instead of simply considering the potential profitability and / or risk presented by an investment opportunity.

Environmental factors relate to the company’s policies on, and interactions with, issues that affect the natural environment. This includes replacing polluting industry practices with recycling technologies, addressing climate change through decarbonisation, swapping conventional energy for renewable energy, changing out pesticides or genetically modified organisms (GMOs) with renewable agricultural practices, and better managing the extraction or use of raw materials in a plethora of ways.

Social factors broadly concern the corporation’s interactions with other societal interests. These issues typically include employee and labour relations, human and animal rights, certain forms of workplace diversity, and the procurement of the products or services that the company supplies.