Put simply, ESG stands for Environmental, Social, and Governance. These three factors are at the core of measuring the sustainability and social impact of an investment in a company or business. Based on a company’s level of involvement in ESG or non-ESG activities, BlackRock determines whether an investment is aligned with the ESG principles and in exchange, be considered a sustainable investment for the fund on the long term.
According to the fund manager, strong governance practices such as risk management oversights and compliance with regulations result in sustainable financial performance as well as create value.