ESG Investing: What Does It Mean?

ESG investing (Environmental, Social, and Governance) is an approach that incorporates non-financial criteria into investment decisions alongside traditional financial analysis. Environmental factors include a company's carbon footprint and resource usage; social factors cover labor practices, supply chain ethics, and community impact; governance factors examine board structure, executive pay, and shareholder rights. ESG investing is sometimes called socially responsible investing (SRI) or sustainable investing. ESG funds have grown rapidly, though debate continues about whether ESG criteria improve or hinder returns.