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What is Environmental, Social and Governance (ESG) investing and why is it important?
- 1 Dongbei University of Finance and Economics, Dalian, China
* Author to whom correspondence should be addressed.
Abstract
This paper explores the definition, significance, opportunities, and challenges of Environmental, Social, and Governance (ESG) investing, supported by real-life examples. ESG investing not only promotes corporate sustainability but also facilitates effective risk management, as demonstrated by the case of APG Asset Management, which reduces investment risks through climate risk assessments. The opportunities of ESG investing lie in stimulating corporate innovation and enhancing brand value. However, it also faces challenges such as fragmented data, inconsistent rating standards, and corporate greenwashing, exemplified by Tesla’s greenwashing incident in 2022. To overcome these challenges, concerted efforts from companies, investors, government regulators, and rating agencies are needed. These include companies genuinely practicing ESG principles, investors focusing on sustainability, governments expediting clear regulations, and rating agencies improving data quality and transparency. Despite numerous difficulties, the future of ESG investing is promising, with the ultimate goal of achieving a win-win situation for corporate health and environmental improvement.
Keywords
ESG investing, sustainable development, risk management, greenwashing
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Cite this article
Liang,H. (2025). What is Environmental, Social and Governance (ESG) investing and why is it important?. Journal of Applied Economics and Policy Studies,18(3),36-38.
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Journal：Journal of Applied Economics and Policy Studies
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