There is no formal definition of an ESG (Environmental, Social and Governance-related) investing style and people often use various names, such as sustainable investing, socially responsible investing and impact investing, interchangeably to describe it.

More and more investors are choosing to put their money where their morals are — into a growing array of products that refer to themselves as environmental investments, social investments and 'governance' investments, often called ESG investing for short. The US Financial Industry Regulatory Authority has published some tips that investment firms ought to keep in mind and traps that it ought to avoid.

ESG essentials

On the environmental front, products might aim at clean energy technology or water conservation. Socially responsible investment criteria might include factors such as gender equality, the promotion of different races in the workplace, fair labour standards, safe working conditions and human rights. 'Governance' might include such factors such as executive pay, the promotion of different races on boards and anti-bribery-and-corruption policies.

ESG investments are available to retail investors, primarily through mutual funds, and investments such as exchange-traded funds (ETFs) and green bonds also offer ESG investment options. Robo-advice platforms might also offer choices between these investments. Each ESG investment is unique and has to be evaluated on its own terms.