Learn in the textbookCompetitive Economics and Market Concepts
DefinitionESG investing (ESG投資) is a way of choosing investments by assessing a company's efforts in the environment, society and corporate governance, in addition to financial information such as sales and profit.
ExplanationIt rests on the view that efforts that rarely show up in financial figures still affect whether a company can keep growing over the long term. Corporate governance refers to the mechanisms that monitor and discipline management so that executives' decisions serve the interests of shareholders and others. By choosing companies whose business is unlikely to be shaken by environmental problems or scandals, investors seek long-term stability.
AnalogyIt is like renting a home by looking not only at how cheap the rent is but also at how well the building is maintained and how responsive the management company is, then deciding whether you could live there comfortably for years.
Memory hookThink of E, S and G as the planet (environment), people (society) and the inside of the company (governance), and you can remember them as moving from the outside in.