ESG criteria refer to a set of standards used to evaluate a company's operations and performance in three key areas: Environmental, Social, and Governance. The Environmental aspect assesses how a company manages its impact on the planet, including issues like carbon emissions and resource use. The Social component examines how a company interacts with its employees, suppliers, customers, and communities, focusing on labor practices and community engagement.
The Governance factor looks at a company's leadership, transparency, and accountability, including board diversity and executive pay. Together, these criteria help investors and stakeholders make informed decisions about a company's ethical and sustainable practices.