ESG stands for Environmental, Social & Governance. An area of business that is becoming higher on the agenda for all types of businesses. For those with no previous knowledge, we have broken down the areas impacted at a glance.
Environmental
A companies impact on the natural environment.
Climate change
Greenhouse gas emissions (GHS)
Biodiversity
Energy and natural resources
Pollution prevention and control
Waste management
Agriculture and land use
Social
How a company manages its relationships (employees, customers, suppliers, communities and society in general).
Health and safety
Labour standards/working conditions
Human rights
Product Safety
Privacy and data protection
Diversity and inclusion
Supply chain management
Governance
How a company is governed.
Transparency
Leadership and corporate governance
Business ethics
Remuneration and incentives
Corporate culture
Risk management
Whistle blowing
The key drivers of change
Investor Scrutiny
There is a growing consensus that climate change and sustainable developments are the 21st century’s major challenges.
Corporates are coming under significant pressure from institutional investors to articulate their approach to them and in particular their transition plan for a net-zero future.
Soft law commitments
The breadth and wide-ranging implications of ESG initially resulted in principles based frameworks as a result of inability to adopt global or even national regulatory change.
Companies’ public commitments to these can be superficial. Increasingly, they are not risk free. Failure to “walk the talk” can lead to claims and serious brand damage.
Regulation
In the EU, the commission is engaged in a rapid and ambitious roll out of green regulation, initially impacting financial markets but extending into industrial activity. This is increasing regulatory obligations to report on and assess ESG risk and opportunities.
Comentarios