What is environmental, social and governance (ESG)? Environmental, social and governance (ESG) is a term used to represent an organisation’s corporate financial interests that focus mainly on sustainable and ethical impacts.
ESG metrics are a measure of how a company manages the risks of environmental, social and governance issues. The risks to its business and shareholders, not the risks the business creates for the outside world, to people and the planet. ESG has become synonymous with the concept of sustainability.
ESG is a guideline for ethical consumerism. It aids in luring in capital, creating loyal consumers, boosting profits, and ensuring the longevity of a company’s operations.
Employees, board members, consumers, regulators, suppliers, and distributors are just few of the many types of stakeholders who want to know a company’s stance on socioeconomic concerns and sustainability measures before investing.
Although it may seem difficult for any company to satisfy investors and establish a successful ESG plan, a well-thought-out ESG strategy may make a huge difference.
What is an ESG strategy and why is it critical to take immediate action?
An ESG strategy is a company-wide plan to improve its long-term viability by addressing environmental, social, and governance concerns. More than ever before, a company’s growth and prosperity depend on its ESG practices. By 2025, Bloomberg Intelligence estimates, ESG assets worldwide could be worth more than $50 trillion.
Concerns about climate change, global warming, and greenhouse gas emissions have fueled the ESG movement in recent years, inspiring lofty international goals like the Paris Agreement. Investors are calling for improved efficiency and effectiveness in green finance frameworks, as well as greater transparency.
Environmental values, human rights, gender equality, and other cultural norms are vital, but so are the standards and principles based on a broader idea of sustainability.