What is ESG investing
ESG investments are long-term investments in companies that save the planet, improve people’s quality of life and are well managed.
To make it easier to look for such companies and invest in them, financiers and environmentalists have developed three factors, which are abbreviated as ESG: ecology, social responsibility, and corporate governance. Different indicators are embedded inside each one:
Environmental. The company must not harm the planet: badly affect the climate, produce greenhouse gases, dump waste, destroy forests, deplete natural resources and use non-renewable energy sources like petrol or diesel.
Social. A company must provide good working conditions, protect the health of workers, ensure occupational safety and gender equality, and build relationships with suppliers and customers.
Governance. The company must maintain reasonable salaries and management structure, conduct audits, develop a tax strategy, consider shareholder rights and deal with internal security.
There are many indicators, and the specific set depends on the sector in which the business operates. For example, it is important for oil companies to consider environmental factors, while banks need to consider corporate governance and customer relations.
