An increasingly important investment criterion that many investors consider when determining what stocks to purchase involves ESG, or the environmental, social, and governance rating of a company. More and more investors want to do good while making money and they also want to avoid companies that do things the general public might consider problematic (at least as it relates to the environment, various social issues, and/or corporate governance policies).

The Vanguard ESG U.S. Stock ETF (NYSEMKT: ESGV) was created to address this increasingly important criterion. When evaluating its overall performance, the exchange-traded fund (ETF) looks like it has the makings for a good core equity holding. Here's why.

Vanguard ESG U.S. Stock ETF is, like most ETFs, just an index-tracking investment. The index here is the FTSE US All Cap Choice Index. The key factors for this index are that it avoids companies that are involved in "adult entertainment, alcohol, tobacco, cannabis, gambling, chemical and biological weapons, cluster munitions, anti-personnel landmines, nuclear weapons, conventional military weapons, civilian firearms, nuclear power, and coal, oil, or gas." Furthermore, it "excludes stocks of companies that do not meet certain labor, human rights, environmental, and anti-corruption standards" and companies that "do not meet certain diversity criteria."

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Source Fool.com