The explicit and systematic inclusion of material environmental, social and governance (ESG) factors in investment analysis and investment decisions that are material to investment performance, i.e. with a view to lowering risk and/or generating (financial) returns. Typically, ESG factors are selected based on their materiality to financial performance of the investment or portfolio, and less typically based on other factors that are relevant to the asset owners. Therefore, the primary focus of ESG integration or ESG investing is typically on how ESG issues impact the performance of the investment or entity, rather than on how the investment or entity impacts Stakeholders or sustainable development outcomes.

IFC. (2021). The difference between ESG and impact investing and why it matters. Medium. https://ifc-org.medium.com/the-difference-between-esg-and-impact-investing-and-why-it-matters-8bf459b3ccb6