What is ESG?
ESG is a set of standards that determine whether a company's operation is socially conscious, sustainable, and properly managed. The three pillars of ESG (Environment, Social, and Governance) are used as criteria to determine if a company has corporate sustainability. It measures whether a company can generate positive financial, social, and environmental outcomes.
Environmental, Social, and Governance (ESG) is an essential strategy for companies to create economic value while complying with environmental, social, and corporate governance concerns. It is a way for companies to show responsibility and commitment to the market in which they work, and to their consumers, employees, and investors. The ESG agenda has become increasingly influential to the boards of directors of companies, in the transformation of businesses, and the decision-making of investors around the world. More and more, ESG criteria is used as a type of investment.
Environmental and Social Criteria
Environmental: waste management; the deforestation policy (if applicable); the company's use of renewable energy sources; the company's position in relation to climate change issues; processes dedicated to reducing or eliminating air or water pollution arising from its operations. Etc. Social criteria may include: What is the company’s turnover rate? Is there any kind of pension plan for employees? What is the level of involvement of employees with the management of the company? Etc.