With national governments setting net-zero targets for the next couple of decades, companies are actively looking for avenues to make their business practices more environmentally and socially responsible.
This line of thought has led to the birth of Environmental, Social, and Governance concerns, more popularly known as ESG.
This line of thought has led to the birth of Environmental, Social, and Governance concerns, more popularly known as ESG.
ESG refers to a set of assessment criteria that gauge a company’s performance based on three criteria.
ESG refers to a set of assessment criteria that gauge a company’s performance based on three criteria.
First of these is the ability of its governance structure. The second and third are its mechanisms to manage environmental and social risks.
First of these is the ability of its governance structure. The second and third are its mechanisms to manage environmental and social risks.
ESG essentially provides a framework for companies to report on the steps they have been taking and will be taking to make their operations more sustainable.
The ‘environmental’ part relates to the efforts taken by a company to reduce its impacts on nature.
The ‘environmental’ part relates to the efforts taken by a company to reduce its impacts on nature.
These efforts include initiatives such as sourcing electricity from renewables.
These efforts include initiatives such as sourcing electricity from renewables.
The ‘social’ part refers to a company’s relationship with its employees, investors, and customers.
Disclosing the diversity of its workforce is an example of the social aspect of ESG.
Finally, the ‘governance’ component of ESG focuses on the administrative structure of an organisation and how the upper management perceives risks.
Finally, the ‘governance’ component of ESG focuses on the administrative structure of an organisation and how the upper management perceives risks.