ESG is the initials of "Environment", "society" and "corporate governance" respectively, where

E is environment, which stands for environment and indicates the effectiveness of an enterprise in environmental protection, utilization of natural resources and pollution management.

S is Social, representing society, which mainly refers to whether an enterprise practices social responsibility in the process of operation;

G is CorporateGovernance, which stands for corporate governance and examines the performance of an enterprise in risk management and legal operation.

Therefore, in the investment, the enterprises selected with the concept of ESG should not only examine the company's operation and profitability, but also meet the characteristics of environmental protection, social responsibility and good corporate governance.

the origin and development of ESG

in fact, ESG is not a new concept, but has a long history.

ESG investment originated from socially responsible investment (SRI), which is the three most important considerations in socially responsible investment. ESG investment originated in Europe and America. The first ESG fund in the United States was established in 1971 and the first ESG index was established in 199. In 26, the United Nations established the Responsible Investment Principles Organization (UNPRI). At the initial stage of its establishment, over 8% of the signatories came from Europe and America, and ESG investment was widely recognized in Europe and America.

according to the report of the American sustainable investment forum in 216, the scale of responsible investment in the United States exceeded 8.72 trillion dollars, of which 8.1 trillion yuan was ESG investment. According to the 216 report of the European Sustainable Investment Forum, the scale of responsible investment in Europe is close to 23 trillion euros, of which 2.6 trillion euros is ESG investment.

since p>214, the asset management scale of ESG has increased at an annual rate of 25%. According to morgan stanley capital international MSCI, 57% of the global investment scale will be driven or influenced by ESG strategy in the next five years.

ESG investment started late in the domestic market, and the first ESG index (China Securities Governance Index) in the A-share market was released in 25. In 28, China issued the first truly socially responsible Public Offering of Fund-Xingye Global Social Responsibility Fund. After 21, the asset management scale of responsible investment funds began to increase significantly.

the role of ESG concept for investors

in the process of investment, investors can effectively reduce investment risks by using ESG concept, and investors can mine through ESG, which can better identify investment risks. The concept of ESG is to evaluate an enterprise from the aspects of environmental protection, rational utilization of resources, pollution management, performance of social responsibility and corporate governance. If the comprehensive score is higher, the rating of ESG will be higher. On the contrary, if an enterprise has serious hidden dangers in these aspects, the rating of ESG will be lower. For example, in 216, The ESG Research Department of MSCI found that many accounting indicators of Huishan Dairy were abnormal, assessed the corporate governance part of ESG concept, and downgraded the ESG rating of the enterprise by one level. Soon after, due to the exposure of capital chain problems, Huishan Dairy's share price plummeted by 85%, suspended trading and was excluded from the Hang Seng Index.