Environmental, Social and Governance (ESG) investing has surged as asset owners demand alignment between financial returns and broader societal impact. Sustainable portfolios incorporate climate risk, carbon emissions data and human‑rights metrics into investment decisions, often excluding “sin stocks” or favoring companies with strong governance and green initiatives. Green bonds debt instruments financing environmentally beneficial projects have experienced exponential growth, providing investors with both income and impact.
Beyond exclusionary screens, active ESG integration involves engaging with company management to improve corporate practices, filing shareholder resolutions on issues like labor standards or board diversity. The rise of sustainability indices and ESG linked benchmarks enables transparent performance tracking. Critics caution against “greenwashing,” where superficial claims obscure insufficient action, but robust reporting standards such as the Task Force on Climate‑related Financial Disclosures (TCFD) are raising the bar for corporate transparency. Ultimately, sustainable investing reflects a deeper recognition that long‑term value creation depends on fostering resilient societies and environments.