Environmental, social, and governance investing refers to a set of standards for a company’s behaviour used by socially conscious investors to screen potential investments.
Environmental criteria consider how a company safeguards the environment, including corporate policies addressing climate change, for example.
Governance deals with a company’s leadership, executive pay, audits, internal controls, and shareholder rights.
ESG investors are also increasingly informing the investment choices of large institutional investors such as public pension funds.
An industry report from US SIF Foundation, investors held $17.1 trillion in assets chosen according to ESG principles in 2020, up from $12 trillion just two years earlier.1 ESG-specific mutual funds and ETFs also reached a record $400 billion in AUM in 2021, up 33% from the year before - and are expected to continue to grow rapidly in the coming years