ESG stands for Environmental, Social, and Governance. It is a framework used to assess an organizations business practices and performance on various sustainability and ethical issues. ESG investing refers to a set of standards that socially conscious investors use to screen investments. ESG criteria are used to evaluate companies and help determine investment plans. The goal of ESG is to capture all the non-financial risks and opportunities inherent to a companys day-to-day activities. ESG is often called sustainability, and it is about a companys business model, how its products and services contribute to sustainable development, and how it manages its own operations to minimize negative impact. ESG has three main pillars: environmental, social, and governance.

• Environmental: This pillar refers to an organizations environmental impact(s) and risk management practices. These include direct and indirect greenhouse gas emissions, managements stewardship over natural resources, and the firms overall resiliency against physical climate risks (like climate change, flooding, and fires).

• Social: This pillar refers to a companys responsibility for its employees as well as its impact on the societies in which it operates. This includes working conditions, labor rights, diversity, and other social factors.

• Governance: This pillar refers to a companys risk management practices, including how it manages its own operations to minimize negative impact. It also includes how the company is governed, including the composition of its board of directors and its executive compensation practices.

ESG investing is sometimes referred to as sustainable investing, responsible investing, impact investing, or socially responsible investing (SRI). ESG initiatives contribute to broader business sustainability efforts that aim to position companies for long-term success based on responsible corporate management and business strategies.