Environmental Social and Governance (ESG)

Environmental social and governance (ESG) criteria are a set of standards for an entity’s behavior used by socially conscious investors to screen potential investments. Environmental criteria define how the entity safeguards the environment including corporate policies addressing climate change for example. Social criteria examine how it manages relationships with employees suppliers customers and the communities where it operates. Governance deals with a company’s leadership executive pay audits internal controls and shareholder right. ESG criteria are used to screen investments based on corporate policies and to encourage companies to act responsibly. ESG is linked to corporate social responsibility (CSR) and is commonly seen as an integral aspect of Governance Risk Management and Compliance (GRC).