Sustainable finance & investment
ESG
Definition
ESG stands for environmental, social and governance — the three clusters of non-financial factors used by investors, companies and regulators to assess sustainability-related risks, opportunities and impacts. The term was coined in the UN Global Compact's 2004 report 'Who Cares Wins', which argued that embedding these factors in capital markets leads to better outcomes.
References
coinage, timeline, traditions
Overview
What it means
ESG grew from earlier ethical and socially responsible investing traditions into mainstream finance after 2004, reinforced by the Principles for Responsible Investment (2006). It now spans data, ratings, funds, integration practices and reporting regimes — and has become politically contested, notably through the US anti-ESG movement, with critics questioning both its financial logic and its policy reach.
How it is used
Used in investment analysis, corporate strategy, disclosure regulation (CSRD/ESRS, ISSB) and stewardship; the term is applied loosely across very different practices, which fuels definitional debate.
Why it matters
ESG is the dominant organising frame for corporate sustainability and sustainable finance — understanding its scope and limits is prerequisite to most current debates. **Note:** The contested and politicised usage of the term (candidate 985) is treated here rather than as a separate entry; the related political backlash is covered under Anti-ESG Movement (ID 115).