All of a sudden it seems as though everyone is talking about ESG. As with all such financial fashions, ignorance is a high-risk strategy – the subject is highly likely to come up at some point in an interview process and you should not only know what it is, but also have an articulate and defendable view on the subject.If I sound a tad cynical, that is only because I am wary of buzzwords and fashions which can end up turning ideas into tick-box formalities (“ESG? – yes, done that. Next item on the agenda?”). ESG is, of course, what used to referred to as ethical behaviour and anything which can be done to embed that into our economic and financial system should be celebrated (if your career ambition is based on having watched The Wolf of Wall Street, don’t bother reading on).So what exactly is it? ESG stands for Environmental, Social and Governance. It is a framework that evaluates a company's performance and impact in these three areas.Let’s break this down. Environmental refers to a company's impact on the natural environment. It involves measuring issues such as carbon emissions, energy and resource consumption, waste management, pollution and climate change initiatives. It is all about prioritising sustainability, conservation and responsible resource management.The social component of ESG is all about a company's relationships with its employees, customers, suppliers, communities and indeed anybody else that its business brings it into contact with (AKA stakeholders). It includes labour practices, employee welfare, diversity and inclusion, product safety, customer satisfaction, community engagement and human rights. This is about creating a positive impact and fostering ethical and inclusive practices.Governance looks at the structure, policies, and practices that guide a company's decision-making processes and operations. It includes things such as board composition, executive compensation, shareholder rights, transparency, risk management and adherence to legal and regulatory requirements. It is about accountability, integrity and responsible leadership.While investor’s attitudes toward ESG can range from tick-box “we pretend to be interested because people expect it”, through to it being hard-wired into their DNA (for example, funds which have been established for genuinely ethical, often altruistic, reasons, sometimes referred to as impact funds), there are strong arguments why a focus on ESG issues can actually improve investor performance.For example, focusing on ESG can help to identify (and mitigate) risks that can damage a company's long-term performance and reputation. Environmental risks, such as climate change and resource scarcity, social risks like labour disputes or product safety issues, and governance risks such as boardroom controversies can all have significant financial and operational costs. By integrating ESG considerations companies can manage (not eliminate, but identify and reduce) these risks and improve their resilience. This may sound hypothetical – believe me, it’s real.Equally, organisations that take ESG issues seriously are more likely to anticipate and adapt to evolving market trends, changing regulations, and stakeholder (that word again) expectations. Governments around the world are implementing regulations and policies that encourage or make ESG practices a legal requirement. These are set to get tougher, so being prepared will make these changes easier to deal with.At the same time, ESG factors have become a core part of investment analysis/decision-making. Many investors now believe that companies with strong ESG performance tend to outperform over the long-term. This has probably now reached the point of becoming a self-fulfilling prophecy – if companies with strong ESG credentials are favoured by investors over those with weak ESG credentials, the share prices of the former will trade at a premium. You don’t have to be an idealogue to believe this – as an investment theory it works just as well for cynics.So what are the arguments against ESG? Depending on your personal beliefs, you may or may not be convinced by these, and they can at times seem self-justificatory, but at the same time they are worthy of consideration.Some critics argue that ESG has become a marketing tool for companies to enhance their public image without making substantial changes (AKA “greenwashing”). This is all about presenting a positive ESG narrative without genuinely implementing meaningful practices. Big oil companies, for example, are often accused of this. In a similar vein, some argue that ESG based investing focuses too much on individual company practices and diverts attention from larger systemic issues.It is also sometimes claimed that a lack of standardised ESG metrics and reporting frameworks makes it challenging to compare and evaluate companies' ESG performance accurately, resulting in inconsistency in assessing ESG impact. Some even believe – in contradiction of my earlier argument - that prioritising ESG factors may come at the expense of maximising shareholder returns.My personal view is that while all these objections may on occasion hold true, they are weak arguments in the face of the increasing acceptance of ESG as a core investment consideration. Either way, ESG appears to be here to stay.It is of course up to you what you believe and how you choose to present those beliefs in interview, but it would be a brave candidate who decided to opt for the cynical view (unless your interviewer is Jordan Belfort). Personally, I would suggest highlighting your awareness of the issue, how it is relevant to whichever part of the financial sector you are aiming to join, how it can be used to identify risks and opportunities as well as enhancing the organisation’s own reputation and providing opportunities for the development of new products and services. This is a chance to demonstrate your own ethical values and show that you can identify potentially profitable business opportunities. Good luck!