Here's What You Need To Know About ESG Funds

ESG stands for Environmental, Social, and Governance. The bulk of this fund's portfolio consists of shares and bonds from companies assessed for their environmental, social, and governance practices. By opting for such investments, you actively promote sustainable growth and responsible business conduct.
Breaking down ESG 

Environmental (E): The 'E' focuses on a company's environmental impact, including carbon emissions, waste disposal practices, and the use of eco-friendly energy sources.

Social (S): The 'S' examines how a company treats its workforce and contributes to society, considering gender parity, welfare systems, and social causes.

Governance (G): The 'G' assesses corporate governance, looking at regulatory compliance, whistle-blower policies, and grievance redressals. 

ESG funds prioritize investing in companies that excel in these areas and avoid those with poor records. ESG Mutual Funds use ESG ratings to assess a company's environmental, social, and governance practices before investing. These ratings are calculated by third-party rating agencies based on publicly available information, helping investors align their investments with their values. 

Advantages of Investing in ESG Mutual Funds
1.  Values Alignment: Invest in companies that prioritize ESG factors, supporting your personal values and contributing to positive change.
2.  Long-Term Performance: ESG-focused companies often perform better in the long run, benefiting from sustainability commitments and risk management.
3.  Risk Reduction: By avoiding companies with poor ESG practices, ESG Mutual Funds help manage risks such as environmental disasters and governance issues etc.

Disclaimer
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.