ESG

In brief: Environmental, social and governance criteria for sustainable investment decisions.

Meaning in practice

ESG criteria are exclusion, best-in-class or engagement filters. Data quality varies greatly and accusations of greenwashing are widespread – the EU action plan and SFDR are intended to curb the uncontrolled growth.

Context for investors and traders

For traders, this term is most useful when preparing and executing an order. Its meaning depends on the venue, liquidity, time frame and order type. A single reading is not a reliable buy or sell decision.

How to use this in practice

Use the term first to describe the situation and add verifiable data: time frame, benchmark, costs and liquidity. Only then does it become an assessment that can be connected to an investment objective and risk budget.

What to keep in mind

Avoid false precision. Many market terms describe probabilities or historical patterns; they neither guarantee a return nor replace the review of a specific security.