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June 14, 2026
The Dispatch

Definition

ESG Investing

ESG investing evaluates companies on Environmental, Social, and Governance factors alongside financials, favouring sustainable, well-governed businesses.

ESG screens look beyond profits at how a company treats the environment (emissions, resource use), society (labour, communities, safety), and governance (board quality, transparency, related-party conduct). The aim is to reward responsible firms and avoid hidden risks.

In India, SEBI mandates a BRSR (Business Responsibility and Sustainability Report) for the top listed companies, and ESG-themed funds have emerged. While ESG can flag governance risks early, investors should look past mere labels to substance, as 'greenwashing' is a real concern.

Related terms

  • SEBI LODRSEBI LODR (Listing Obligations and Disclosure Requirements) are the regulations governing what listed companies must disclose to shareholders and exchanges.
  • Quality InvestingQuality investing focuses on businesses with strong, durable fundamentals, high returns on capital, low debt, and consistent earnings, often paying up for excellence.
  • Corporate GovernanceCorporate governance is the system of rules, practices and controls by which a company is directed, overseen and held accountable to its stakeholders.

Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.