What is an ESG bond?

An ESG bond is a type of debt security. A debt security means that the issuer owes the holder a debt and is obligated to pay the principal and interest at a set maturity date. Bonds are a fixed-income security, meaning bond interest is usually payed at set intervals.

What is ESG investing?

ESG stands for environmental, social, and governance. ESG investing refers to how companies score on these responsibility metrics and standards for potential investments. Environmental criteria gauge how a company safeguards the environment. Social criteria examine how it manages relationships with employees, suppliers, customers, and communities.

What is the difference between ESG bonds and green bonds?

The difference is that an ESG bond is issued by a company that adheres to a high level of environmental, social, and governance standards. With this combination, an investor can build their portfolio while pushing for company standards they believe in. ESG bonds are sometimes compared with green bond.