Which factors are considered in ESG investing?

• A. Economic, Social, and Geopolitical factors.
• B. Environmental, Social, and Governance factors.
• C. Entertainment, Social, and Growth factors.
• D. Ethical, Social, and Governmental compliance.

Answer: (B)

In ESG investing, the main idea is to evaluate a company based on non-financial factors that can affect long-term performance and risk. The three areas are Environmental, Social, and Governance. Environmental looks at how a company impacts the planet—its carbon footprint, resource use, waste, and pollution. Social covers relationships with people and communities—labor practices, diversity, human rights, and product safety. Governance focuses on how the company is run—board independence, executive compensation, transparency, ethics, and shareholder rights.

That’s why the best choice is Environmental, Social, and Governance. The other options mix in terms that aren’t the standard ESG categories—for example, geopolitical factors aren’t the ESG trio, and entertainment or growth aren’t part of ESG’s framework. Governance in ESG refers to corporate governance, not governmental rules or simply compliance.