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  • Writer's pictureMaya Ardon

What is ESG?

Written By: Maya Ardon

Edited By: Vanessa Lu Langley

ESG is an acronym for environmental, social, and governance criteria: standards that investors use to analyze material risks and growth opportunities for companies given the modern global challenges, especially due to climate change and the call for sustainability (CFA Institute, n.d.). Essentially, these categories give a framework to investors to incorporate these values into their investing choices, in order to make a more sustainable investment. For example, under the environmental category, investors can evaluate the pollution or waste that a company produces and examine that problem with the specific investment being made (CFI, 2021). ESG is growing in the energy world because global environmental challenges – such as those brought about by climate change and its socioeconomic implications – are creating new risk factors for investors to consider (MSCI). Companies face great challenges – including scrutiny from investors – if they do not manage these risks and provide a basis for sustainable investing in a rapidly changing world.


ESG Investing and Analysis. CFA Institute. (n.d.). Retrieved February 15, 2022, from

ESG (environmental, social and governance). Corporate Finance Institute. (2021, August 28). Retrieved February 15, 2022, from

ESG 101: What is environmental, social and governance? MSCI. (n.d.). Retrieved February 15, 2022, from

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