What does ESG stand for?

Environmental, Social and Governance (ESG) refers to non-financial factors that we can use to evaluate a company or guide our financial decisions.

Traditionally, financial decisions have been based entirely on profitability or utility. For example, it is profitable for businesses to manufacture their products in developing countries with cheaper and less regulated manufacturing processes, even if it means polluting more and exploiting workers.

ESG metrics try to measure how socially responsible a company is. Based on ESG metrics, investors can avoid putting their money in companies that wilfully destroy the planet, exploit child labourers in impoverished countries and so on.
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