What Does ESG Funds Mean and How Does It Work?

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What Does ESG Funds Mean and How Does It Work?
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What is ESG?
In our day to day life, while reading the finance
section of newspapers, we have all heard or ESG
funds in India, some or the other time. But do we
exactly know what ESG funds actually means? To
put it in simple words, ESG funds are those
funds, or those investments and equities that are
done with the Environmental, Corporate and Social
funds integrated. Any kind of investment that a
big business makes, should be done keeping in
mind, these factors.
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Environmental
The environmental aspects include monitoring the
companys waste, pollution, energy and natural
resource management and treatment of animals if
using any. It talks about the ways in which the
company is expanding their business but is also
sensitive towards integrating the environmental
factors in it. Preservation and conservation of
natural resources is mandatory. For any business
that uses these natural resources, needs to fund
a way to do it sustainably.
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Social
When we talk about ESG funds in India, and
especially about the social aspects, it is more
about the companys managements relationships
with people they work for, they work with or the
people who work for them. It ensures whether the
company is taking care of the needs and safety of
the employees work environment. Maintains and
gives equal respect to the suppliers who work for
them and give a good share of profit to
betterment of the society around.
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Governance
When it comes to governance, it is all about
legality. It judged a company on the legal
practices that they follow. Whether or not they
are keeping transparency in their accounting
methods, shareholders being given the opportunity
to vote, how they deal in case of any conflict in
interest, whether they are politically neutral or
not, if all the employees are being treated
fairly and the wages are with respect to
regulation laid down by the government.
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Role of asset management company
For any company to ensure that enough funds is
being directed towards the above-mentioned
factors, they need to have a good holding and
understanding to decide whats more important at
what time. For this, they may want to hire any
leading asset management companies in India that
will, after a detailed study on their present
condition, guide and help them in taking all the
above-mentioned decisions.
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Thank You
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