Certified Environmental Social and Governance Analyst (CESGA) EFFAS Practice Test 2025 - Free CESGA Practice Questions and Study Guide

The purpose of ESG ratings is fundamentally to evaluate how well a company manages its Environmental, Social, and Governance risks and opportunities. ESG ratings provide insights into a company's practices in these three critical areas, allowing investors, stakeholders, and consumers to make informed decisions based on sustainability and ethical standards.

By assessing a company’s performance related to ESG factors, these ratings help in understanding how well a company is positioned to handle potential environmental challenges, social responsibilities, and governance issues. This evaluation considers various metrics, including the company's energy efficiency, labor practices, community engagement, and board diversity, among others.

This focus on how companies manage ESG risks and opportunities helps stakeholders ascertain the long-term viability and resilience of the company in a landscape increasingly influenced by sustainability and social responsibility factors.