The Lowdown
Environmental: A company’s use of energy and natural resources, and the pollution and waste it creates.
Social: How a company manages relationships with stakeholders, including employees, suppliers and customers.
Governance: How a company’s leadership operates. Think: diversity, inclusion, shareholder rights, engagement in the sustainability reporting process.
ESG integration: How ESG factors are incorporated into investment analysis and decisions to determine the potential impact on company and sector performance.
Impact investing: Often confused with ESG investing, this investment strategy generates financial returns alongside a positive social or environmental impact; impact investing is more focused on the positive social/environmental outcome, whereas ESG investing usually brings better financial returns.
Stewardship:
How financial service companies engage with a company to assess its ESG risks and opportunities.
Greenwashing: Companies providing misleading information about the sustainability of their products and practices.