An ABC on ESG and the Financial Risks It Highlights: QuickTake

In one sense, defining “ESG” is easy — it’s an approach to finance and investing focused on managing risks from environmental factors, social issues and questions of corporate governance. Sorting out the differences between ESG and similar, sometimes overlapping strategies is harder, in part because the term has come to mean different things to different people. A boom in the use of ESG factors has fed skepticism that the approach is nothing more than a marketing gimmick, fueling a backlash and regulatory crackdown.

1. What’s the big idea?

ESG is part of a wider strategy known as sustainable investing. Broadly, ...