Abstract
The purpose of this paper is to test the effectiveness of Environmental, Social and Governance (ESG) in portfolios, and explore the limitations of ESG use. Using risk and return indicators, and comparing the advantages and disadvantages of ESG rating under common credit rating systems, the effectiveness of investment products is discussed. Finally, it explores how ESG can be effective in achieving sustainable development. By reviewing the experimental ESG research and information in the past, this study shows that the use of ESG systems can enhance market stability and provide a more comprehensive risk rating for relevant stakeholders. However, under different regulators, the variability of standards stipulated for this evaluation system leads to the possibility of fraud.
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