What is Socially Responsible and Sustainable/ESG Investing?
Socially responsible investing and sustainable/ESG (Environment, Social, and Corporate Governance) investing are terms that are often used interchangeably. While they are both forms of investing that evaluates investments based on their societal impact, their approaches are somewhat different. Socially responsible investing focuses on the exclusion of specific industries, while sustainable investing takes into account factors considered important to the overall sustainability of a business:
- Environmental issues – Climate change, carbon emissions, air/water pollution, energy efficiency
- Social issues – Labor standards, supply chain management, health and safety, gender diversity
- Governance issues – Board and executive compensation, lobbying, business ethics, political contributions