ESG and
Sustainable
Investing
ESG Investing refers to an investment strategy that integrates environmental, social, and governance (ESG) factors into decision-making alongside traditional financial metrics. It evaluates companies based on their performance in areas such as climate change, pollution, resource use, labor practices, diversity, board independence, and ethical business conduct. The goal is to identify long-term value, reduce risk, and support sustainable, responsible business practices.
What ESG Investing Means
ESG investing refers to evaluating companies based on three key factors:
Environmental (E)
How a company impacts the environment—carbon emissions, energy use, waste management, and resource conservation
Social (S)
How it manages relationships with employees, customers, suppliers, and communities—labor practices, diversity, and human rights
Governance (G)
How the company is run—board structure, executive compensation, transparency, and shareholder rights
Instead of focusing only on financial performance, ESG investing integrates these non-financial factors to assess risk and long-term sustainability. Companies with strong ESG practices are often seen as better positioned to manage regulatory risks, reputational challenges, and operational disruptions.
Environmental, Social, and Governance (ESG) investing has moved from a niche concept to a mainstream investment approach. It allows investors to align their portfolios with their values while still pursuing financial returns. As awareness around climate change, corporate ethics, and governance standards grows, ESG investing continues to gain relevance in long-term portfolio construction.
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Understand Sustainable Investing
Sustainable investing refers to a range of practices in which investors aim to achieve financial returns while promoting long-term environmental or social value. Sustainable investing ensures firms aren’t judged solely on short-term financial gains but on a broader picture of what they contribute to society and how.
Explore Sustainable Investing Strategies
Negative or exclusionary screening excludes specific sectors, companies, or practices from a fund or portfolio that do not meet certain ethical standards. Common criteria for exclusions include tobacco, fossil fuels, weapons, and companies with poor labor practices.
Positive or best-in-class screening selects investments in sectors, companies, or projects based on positive ESG performance relative to industry peers.
Activist investing involves buying equity in a company to influence how it operates. Investment decisions are based on moral values or causes that matter to the investor.
Impact investing is based on the idea that you can align your investments with your personal and philanthropic values to create positive social or environmental outcomes while also generating financial returns. For instance, if you are interested in reducing fossil fuel use, you may invest in companies developing innovative renewable energy solutions.
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ESG investing means choosing investments based on environmental, social, and governance factors, in addition to financial performance.
Impact investing is the act of purposefully making investments that help achieve certain social and environmental benefits while realizing financial returns.
Greenwashing occurs when companies or funds exaggerate their sustainability practices to appear more environmentally or socially responsible than they are.
Yes, ESG investments can be integrated across asset classes and sectors to build a diversified portfolio.
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