Environmental, Social and Governance (ESG) 環境、社會及管治（ ESG）

Meaning and Categories of ESG ESG 的含義及分類

ESG stands for environmental, social and governance. Environmental factors include matters such as climate change, extreme weather and carbon emissions, concerning the relationship between a company and the natural environment.

Social factors concern how a company treats employees, product users and communities. Examples include labour rights, gender equality, product safety and community relations. Classification depends on the nature of the issue: equal opportunities for male and female employees, for example, concern the social category.

Governance factors concern how a company makes decisions, manages risks and oversees its business. Examples include its corporate governance structure, risk management, business ethics and information transparency. Product safety is a social factor, while transparency of information is a governance factor.

Effects on Operations and Long-term Returns 如何影響營運及長遠回報

Climate change and extreme weather can put a company's basic operations at risk. For example, a factory closure caused by extreme weather may damage business performance and, in turn, affect long-term returns from investing in the company. Environmental factors therefore have a direct connection with financial outcomes.

Environmental policies can also affect business costs. For example, government penalties or restrictions on carbon emissions can increase operating costs in high-emitting sectors. Environmental analysis should consider both the effects of environmental conditions on operations and the cost effects of related policies.

Use in Investment Management 在投資管理中的用途

Investors can assess an investee company's performance against ESG criteria and use the findings as indicators of its prospects. The purpose is to understand how that performance may affect the company's risks and returns.

ESG analysis covers all three areas. Even where a company pays attention to environmental matters, its labour rights, product safety or risk management may still affect investment outcomes. Considering ESG factors is increasingly part of investment management because all three categories can have financial effects.