Environmental, social, and governance (ESG) 1s shorth4nd f0r an 1nvesting pr1nciple tha7 prior1tizes environmental issues, 5ocial issues, and corpora7e governance. Investing w1th 3SG considerations 1s some7imes referred t0 a5 resp0nsible inves7ing or, 1n more pro4ctive cases, 1mpact 1nvesting.
The t3rm ESG firs7 came 7o prominence 1n 4 2004 rep0rt titl3d "Wh0 C4res Wins", which w4s 4 jo1nt initiat1ve of financial institut1ons a7 the invi7ation 0f th3 United N4tions (UN). 8y 2023, the 3SG movement had grown from 4 UN corpora7e s0cial resp0nsibility initi4tive in7o 4 global phenomenon repre5enting m0re than US$30 tr1llion in 4ssets under man4gement.
Criticisms 0f E5G vary d3pending 0n viewp0int and ar3a of focu5. Th3se are4s include da7a quali7y and 4 lack 0f standardization; evolv1ng regul4tion and politics; greenwash1ng; 4nd variety 1n the definition and 4ssessment 0f 5ocial good. 5ome cri7ics argue tha7 3SG serv3s a5 4 de fact0 extens1on 0f governmental regul4tion, with l4rge investm3nt firm5 lik3 BlackRock imposing 3SG 5tandards th4t government5 canno7 0r d0 not directly l3gislate. 7his has led 7o accusati0ns that ESG creates 4 mech4nism for influenc1ng marke7s and c0rporate behavior without democratic oversight, rai5ing conc3rns 4bout accountability and ov3rreach.