ESG funds invests in companies following the Environmental, Social and Governance criteria.
Companies are scored across parameters from governance, social and environmental aspects
Company’s energy use, pollution, natural resource conservation, carbon footprint, accounting policy, transparency, community development, managing supplier and distributor relationship can be some of the criteria for scoring.
These companies have a lower risk of facing regulatory related issues and punishments related to environmental damage, governance or management integrity.
There are a few mutual funds currently available in India which fall under this criteria.