Private Funds Glossary

ESG

Definition: ESG refers to the environmental, social, and governance factors that are considered in assessing the sustainability and societal impact of investments. ESG is a framework used by investors and fund managers to evaluate the non-financial performance of companies and make informed investment decisions.

Example: A private fund manager may use ESG criteria to assess potential investments in companies. They may analyze the company’s environmental impact, such as its carbon emissions or resource usage, social factors like employee welfare and community relations, and governance practices including board diversity and transparency. Based on this analysis, the fund manager makes investment decisions that align with ESG principles.

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