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ESG Ratings Explained: Choosing Truly Sustainable Investments

  Introduction As sustainable investing gains traction, ESG (Environmental, Social, and Governance) ratings have become a critical tool for evaluating a company’s ethical and sustainability practices. However, not all ESG ratings are created equal , and understanding their methodologies is essential for making truly sustainable investments. This guide explores how ESG ratings work, the best ESG investment strategies, and what to watch out for when selecting sustainable assets. 1. What Are ESG Ratings? A. Definition of ESG Ratings ESG ratings measure a company’s sustainability and ethical impact across three key areas: ✔ Environmental (E) – Carbon footprint, energy efficiency, waste management. ✔ Social (S) – Employee relations, diversity, community engagement. ✔ Governance (G) – Corporate ethics, board diversity, executive pay policies. 💡 Example: Tesla (TSLA) scores high on environmental innovation but has been criticized for poor governance and labor practices . B. Why E...