What is ESG and Why is it Important

According to the Financial Times lexicon, "ESG" (environmental, social and governance) is a generic term used in capital markets and used by investors to evaluate corporate behavior and to determine the future financial performance of companies.

ESG factors include sustainable, ethical and corporate governance issues such as managing a company's carbon footprint and safeguarding systems in place to ensure full accountability.

The investment world has incorporated ESG talk in order to describe the performance of investment and fund portfolios on environmental, social and governance criteria. Fund managers and financial analysts who can interpret and relate ESG factors to a company's future prospects may potentially develop a competitive advantage should others fail to recognize the same risks or opportunities related to those factors.

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