How does sustainable investing take into account social, environmental and governance issues in investment decisions?

Sustainable investing takes into account social, environmental, and governance (ESG) issues in investment decisions by considering the impact of these factors on the longterm financial performance of companies. For example, companies that have strong ESG practices may be more resilient and better able to manage risks, which can lead to better financial performance over time. On the other hand, companies with poor ESG practices may face greater risks and challenges that could harm their financial performance.

Sustainable investors typically use a range of ESG metrics and data sources to evaluate companies, such as their carbon footprint, employee diversity, board independence, and executive compensation practices. By integrating ESG factors into investment decisions, sustainable investors aim to generate longterm financial returns while also contributing to positive social and environmental outcomes.