ESG investing is a form of sustainable investing that considers environmental, social and governance factors to judge an investment’s financial returns and its overall impact. Environmental, social, and governance (ESG) data was created to help socially responsible investors make better decisions. Investors use ESG data to find companies that are trying to reduce their negative effects on society and/or give back to society.
When it comes to financial returns, investments with high ESG scores tend to do better, while investments with low ESG scores may hurt returns. Even though there is a layer of social consciousness, the main goal of ESG valuation is how well a company does financially.