Environmental, geographical… what does it actually stand for? Whenever you type it up it’s just articles like ‘investor-this investor-that’, but what does this got to do with anything? It’s never explained what exactly it is.
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ESG stands for environmental-social-governance. Essentially, ratings agencies assess a company by the social values it promotes.
Environmental related to emissions, etc.
Social relates to racial issues, LGBT stuff, etc.
Governance relates to the way a company is run. E.g. transparency, etc.
Obviously these values largely breakdown almong leftwing/rightwing lines. For one reason or another many of the large investors, such as Black Rock, Vanguard, etc have pushed very strongly to only invest in companies that espouse ESG values. Having a bad ESG score had made it much harder to finance projects and do other high-cost things required to run a large corporation.
The anti-ESG push is essentially a movement to remove these political topics from business.
Another note is that esg scores don’t seem to have much bearing in the real world. Tesla, for example, has a lower esg score than several oil companies.
Contrary to what another commenter said (and supported by cherry-picking one example), there is evidence of positive correlation between ESG scores and financial performance: [https://www.wolterskluwer.com/en/expert-insights/the-importance-of-esg-as-a-key-drive-of-corporate-performance](https://www.wolterskluwer.com/en/expert-insights/the-importance-of-esg-as-a-key-drive-of-corporate-performance) .
ESG is explained well above as environmental, social, governance. Companies that adhere to these principles are sought after by customers who want to do business and associate with a positive brand identity, employees who want to work in a welcoming environment, and investors that know these companies perform well.
The concept has been around for twenty years and isn’t going anywhere. It is infused with political assumptions primarily for the ‘social’ component, called DEI (diversity, equality, inclusion), which inspires businesses to diversify their employee base and appeal to broader audiences. Some politically-driven groups see this as legitimizing people they disapprove of.
Some politicians who were educated in the Ivy League know this, but tell their voters they can do something about it. Anti-ESG/DEI is as destined for failure as an idea can get.
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