What does ESG stand for? The starter’s ESG glossary

Investment management is known for its bevy of TLAs (Three Letter Acronyms). Some of them you may have heard before such as SAA (Strategic Asset Allocation), MER (Management Expense Ratio), NAV (Net Asset Value) or even ETF (Exchange Traded Fund).

Another TLA that has been receiving a great deal of coverage in the media is ‘ESG’ which stands for Environmental, Social and Governance. ESG refers to three factors that are sometimes used in evaluating an investment, in addition to traditional performance metrics.

Many investors today are keen to make investment choices that align with their broader values – for example, ensuring that the companies they are investing in are paying their employees fairly and offering suitable working conditions, not damaging the environment through the production or supply chain process, and adhering to corporate policies.

What is the E in ESG?

Environmental factors can focus on pollution generated, waste management practices, resource utilisation, carbon emissions, supply chain management, and impact on climate change.

What is the S in ESG?

Social factors might be concerned with how companies respect employees and people in the wider community. Relevant factors include workplace diversity, labour practices, working conditions, and workplace health and safety.

What is the G in ESG?

Governance factors include corporate policies and company governance practices. Tax strategy, data security, product safety, executive compensation, donations, lobbying, bribery, misconduct, business ethics, culture, innovation, and board diversity could be relevant.


To help you navigate the ethical investing landscape, we have put together a glossary of a few terms you might come across.

These definitions certainly don’t cover all of the terminology used in the ethical segment, but hopefully will be useful as a reference as you continue your ESG investment journey.

Learn more

Learn more about ESG, ethical investing and ethical ETFs.

To continue learning about ETFs, portfolio construction and investment strategies, visit the Education Centre.

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Alistair Mills