ESG Equity

ESG stands for environmental, social, and governance. ESG Equity Funds and ETFs... ESG stands for environmental, social, and governance. ESG Equity Funds and ETFs have a mandate to invest in securities that score high on environmental, social and governance factors. These factors are said to measure the sustainability and ethical impact of an investment. They are typically comprised of stocks and bonds. Environmental factors typically include the carbon footprint of a company, as well as any efforts to mitigate this effect. Pollution and waste are other environmental issues within the ESG umbrella. Social factors can include pay equity, the percentage of women and racialized minorities in upper management, and whether a company has lingering issues of discrimination. From a governance perspective, an ESG framework looks at how well a firm is managed, whether shareholder concerns are addressed and whether a corporation’s risk controls are adequate to prevent fraud or other malfeasance. ESG can be used as either a positive or negative screen. A positive screen looks to include companies in a portfolio that are leaders on issues of sustainability. Meanwhile, a negative screen omits companies from certain sectors with issues that cannot be overcome. These might include the oil and gas, tobacco, and arms industries. It is important to note that ESG Equity Funds and ETFs can be controversial. Some investors maintain an ESG lens is good investing, while others point to data showing underperformance by funds that use ESG analysis as a key input into their investment decisions. Last Updated: 11/15/2024 View more View less

ESG stands for environmental, social, and governance. ESG Equity Funds and ETFs have a mandate to invest in securities that score high on environmental, social and governance factors. These factors are said to... ESG stands for environmental, social, and governance. ESG Equity Funds and ETFs have a mandate to invest in securities that score high on environmental, social and governance factors. These factors are said to measure the sustainability and ethical impact of an investment. They are typically comprised of stocks and bonds. Environmental factors typically include the carbon footprint of a company, as well as any efforts to mitigate this effect. Pollution and waste are other environmental issues within the ESG umbrella. Social factors can include pay equity, the percentage of women and racialized minorities in upper management, and whether a company has lingering issues of discrimination. From a governance perspective, an ESG framework looks at how well a firm is managed, whether shareholder concerns are addressed and whether a corporation’s risk controls are adequate to prevent fraud or other malfeasance. ESG can be used as either a positive or negative screen. A positive screen looks to include companies in a portfolio that are leaders on issues of sustainability. Meanwhile, a negative screen omits companies from certain sectors with issues that cannot be overcome. These might include the oil and gas, tobacco, and arms industries. It is important to note that ESG Equity Funds and ETFs can be controversial. Some investors maintain an ESG lens is good investing, while others point to data showing underperformance by funds that use ESG analysis as a key input into their investment decisions. Last Updated: 11/15/2024 View more View less