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An Overview of ESG Merits

The acronym “” is an abbreviation for Environmental, Social, and (Corporate) Governance. These three broad non-financial areas of interest are often associated with  who specifically seek companies that incorporate their values and concerns with ESG merits into their selection of investments instead of potential profitability and risk presented by an investment opportunity. While companies now offer free  lists and , there is no all-encompassing list of all ESG factors. Many ESGs interlink each other; however, some factors can be associated with each term.

The environmental aspect of ESG looks at how some operations affect nature and the environment, ranging from the  a company emits, ,  and treatment, , , and their usage of . The social factor of ESG examines a business’s relationship with its , , , surrounding communities, and other , such as the company’s impacts on employees’ health or safety and how much they care about the local communities. The governance aspect of ESG focuses on  and the company’s overall leadership, including companies’  about their accounting behavior or when navigating a . This way of investing has been coined “” since the impact of a specific action on a wide array of factors associated with the ethics of a company’s actions. While not mandated by law, many companies have increased their ESG efforts as a new method to attract new investors, simultaneously letting investors avoid investing in companies that commit severe harm, such as oil spills or other scandals. 

While many of these factors can be measured, there can be difficulty assigning monetary value and accuracy to such statements and possible allegations of . In response to this issue,  recently created  in the Division of Enforcement. Under existing restrictions, the task force will produce an initiative that ensures that any misconduct including any misstatements or materials gaps in any publishing of climate risks. This task force will also observe and disclose all things related to advisors of investments and will fund ESG methods. The Climate and ESG Task Force will also seek certain ESG- related problems such as . It is foreseen that the SEC will  in this growing area of investment. For additional information on this topic, see ?