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Investing has advanced beyond chasing returns. Some investors have pursued aligning their strategies with their values and concerns in society and the environment. This has pushed the financial markets to shift into a more sustainable and equitable market that moves from a traditional return-focused investment into a long-term sustainable one. With this pursuit of qualitative data, the need to assess a company’s viability for investment beyond the financial statements has proved the importance of the new metric called ESG scores.
ESG scores, or Environmental, Social, and Governance scores, help assess the company’s environmental impact, contribution to society, and internal governance. Various institutions offer these metrics to help investors understand the company’s goals and impact on the environment and society.