What is ESG? Well, when it’s used in the investment management context it refers to Environmental, Social and Governance standards which a company sets to regulate its own behaviour to illustrate to investors that it is being socially conscious and responsible.
It is often used in conjunction with another acronym, SRI – or Socially Responsible Investment. An SRI fund manager would screen listed companies in an index, taking into account their ESG standards and reporting and either positively include that company in its investment universe, or negatively exclude the company, according to the investment criteria of the manager.
So sounds great, but as clear as mud so far. What we’ll do is start to unpack this area and explain the different aspects of SRI and ESG.
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