Environmental, social and governance (ESG) factors cover a wide spectrum of issues that traditionally aren’t part of financial analysis, but are increasingly being considered by investors.
Factors might include how corporations respond to climate change, water management, the effectiveness of their health and safety policies, how they manage their supply chains, how they treat their workers and whether or not they have a company culture that builds trust and fosters innovation. Investors may also consider whether investments meet global standards for sustainability reporting (GRI) in transparency and accountability.
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