Environmental, Social, and Governance (ESG) is about driving business growth while building a more sustainable, equitable, and ethical future for the world.
The three pillars of ESG are:
Environmental – this has to do with an organization's impact on the planet.
Social – this has to do with the impact an organization has on people, including staff and customers, and the community.
Governance – this has to do with how an organization is governed. Is it governed transparently?
Purpose of ESG
Environmental, social, and governance (ESG) investing refers to a set of standards for a company's behavior used by socially conscious investors to screen potential investments. Environmental criteria consider how a company safeguards the environment, including corporate policies addressing climate change
How does ESG benefit a company?
'G' or Governance relates to internal practices and policies that lead to effective decision-making and legal compliance. ESG facilitates top-line growth in the long run, attracts talent, reduces costs, and forges a sense of trust amongst consumers.
An ESG model? The Steps
Set Overall Goals.
Create a Budget.
Evaluate Opportunities.
Construct an ESG Framework.
Build a Sustainability Team.
Check Your Progress.
Promote Your Performance.
Is ESG a framework?
ESG is a framework that helps stakeholders understand how an organization manages risks and opportunities around sustainability issues. ESG has evolved from other historical movements that focused on health and safety issues, pollution reduction, and corporate philanthropy.
How do companies implement ESG?
How to Develop an ESG Strategy
Step 1: Conduct a materiality assessment. ...
Step 2: Establish the baseline. ...
Step 3: Set ESG goals. ...
Step 4: Analyze performance gaps. ...
Step 5: Create an ESG plan. ...
Step 6: Implement the ESG plan and measure key performance indicators (KPI) ...
Step 7: Perform regular ESG reporting.
What are the key ESG metrics?
Common ESG Metrics
Greenhouse gas emissions.
Air and water pollution.
Biodiversity.
Business circularity.
Deforestation.
Recycling and waste management.
Water security.
Energy efficiency.
Key challenges and good practices
Adapting stakeholder management and spreading ESG knowledge in-house. Collecting, managing, and using ESG data for risk modeling. Delivering and communicating ESG commitments. Embedding ESG in existing risk practices.