ESG (Environmental, Social and Governance) is a system used to evaluate how socially and environmentally responsible company is. Does a company produce sustainable goods that are produced in an environmentally friendly manner? How does it handle relationships with employees, customers, and the community where they do business? Governance refers to the company’s leadership, executive pay, and shareholder rights.
Financial companies make decisions based on ESG scores. For example, banks may refuse business loans to companies whose products or services do not conform to the ESG standard of socially or environmentally responsible, do not have a diverse enough work force or offer paid leave for abortions. Investment firms are sacrificing potential return on investments and performance for only investing in stocks that have high ESG scores. Many pension plans that are managed by “woke” firms are losing a lot of money.