What is Environmental and Social Governance (ESG)?
Term: Environmental and Social Governance
Environmental, Social, and Governance (ESG) are a set of factors that are used to measure and evaluate a company’s sustainability efforts to hold them accountable for their ESG impact. Environmental responsibility includes emissions, energy consumption, pollution, waste disposal, and water usage. Social responsibility includes discrimination, diversity, human rights, and community relations. Meanwhile, governance covers shareholder rights, political contributions, executive compensation. Investors often use ESG elements in their investment decisions to understand the overall risks and opportunities involved in a company’s operations.
Key benefits of environmental, social, and governance (ESG)
By implementing an ESG strategy, companies can:
Build an advantage against companies who don’t have an ESG strategy
Organizations that prioritize ESG differentiate themselves in the marketplace. They are more likely to attract customers and investors and position themselves as leaders in sustainable business practices for long-term success and growth.
Improve financial performance by implementing sustainable efforts that improve the bottom line
Implementing ESG practices can lead to cost savings through efficiency improvements, waste reduction, resource optimization, and innovation in technologies and business practices that enhance financial performance.
Build customer loyalty
Embracing ESG initiatives helps organizations build a positive reputation with customers who are committed to environmental and social responsibility.
