This particular framework considers social, governance, and environmental factors along with financial factors. All of these factors tend to play a key role in the investment decision-making procedure.
Not only that but it is considered to be a process for assessing which companies score or perform on each of the factors i.e. E, S, and G. So, with the help of ESG analysis, the investors focus on getting an understanding that whether a company, they are considering to invest is a viable investment or not.
Environmental or E assesses how the activities carried out by a particular company impact the environment. It also suggests what approaches they are adopting to manage environmental risks. It includes both direct operations as well as across the supply chain. Some examples of this are greenhouse gas emissions, natural resources preservation, animal treatment, resource scarcity, and management.