Environmental, social, and governance (ESG) criteria are a set of operational requirements used by socially aware investors to assess possible investments. Environmental criteria look at how a firm behaves as a steward of the environment. Social criteria look at how it deals with workers, suppliers, consumers, and the communities in which business works. The leadership of a firm, CEO compensation, audits, internal controls, and shareholder rights are all covered under governance.
Environmental, Social, and Governance (ESG) criteria are standards used to check how responsible a company is:
- Environmental looks at how the company treats nature (like pollution, energy use, waste).
- Social checks how it treats people (like workers, customers, and communities).
- Governance reviews how the company is run (like leadership, ethics, and transparency).
Investors use ESG to decide if a company is doing good for people and the planet.