ESG ratings are a way of measuring how well a company is performing on environmental, social, and governance issues.
According to the Harvard Law School Forum on Corporate Governance, ESG ratings help investors, stakeholders, managers, employees, vendors, and others better understand the steps an organization is taking to improve sustainability practices, reduce environmental impacts, and minimize various risks that can impact a company.
ESG ratings also help companies identify areas for improvement, benchmark themselves against peers, and communicate their progress and value to the market.
As the two graphs below indicate, the interest in ESG over time has jumped considerably as have ESG Mutual Funds under management. These graphs literally do say a thousand words.
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