Environmental, Social, Governance (ESG)

Environmental, Social, Governance (“ESG”) considerations are tools that both public and private investment professionals use to evaluate a company ’s long-term risk and return. ESG factors are used as a risk management framework to show investors how certain issues— for example, drought or gender diversity—can impact a business’s bottom line. Firefighters, teachers, police officers, and other career public servants with pensions rely on investment professionals, like state treasurers and pension fund oversight boards, to manage their money with care and prudence and to seek the highest possible rate of return. This is why ESG considerations are so critical: they help investors make decisions with eyes-wide-open so they can generate money for their clients while avoiding risks. Attorneys general can be strong advocates for ensuring that investors and investment managers are able to consider ESG factors.