ESG
A framework -- Environmental, Social, and Governance -- used to evaluate a company's sustainability and ethical impact.
Definition
ESG stands for Environmental, Social, and Governance -- three categories of non-financial criteria used by investors, regulators, and consumers to assess a company's impact and risk beyond pure financial performance. Environmental criteria cover emissions, resource use, and pollution; social criteria cover labor practices and community impact; governance covers leadership structure, transparency, and ethics.
ESG reporting has become increasingly standardized as investors and regulators push for consistent, comparable sustainability disclosures across industries.
In Practice
An investment fund that screens companies based on emissions data, labor practices, and board independence before investing is applying an ESG framework.