What is ESG: Environmental, Social and Corporate Governance
As climate change becomes an ever-growing concern, the promotion of the circular economy intensifies, and the focus on companies’ internal practices sharpens, the need for adopting less environmentally damaging operations has become more crucial than ever. This means that not only should companies aim to minimize their environmental impact, they should also comply with legal regulations, respond to societal expectations and procure their long-term sustainability. Consequently, the concept of ESG — Environmental, Social, and Governance — has become an essential tool in the corporate world to evaluate and guide the ethical and sustainable activities of companies.
The ESG concept basically covers 3 approaches:
- Environmental aspect addresses companies’ compliance with regulations related to climate change, such as resource management, emissions, pollution control, and sustainability.
- Social aspect addresses companies’ compliance with laws and standards related to labour practices, employee rights, and management of relations with customers and communities.
- Governance aspect addresses the internal systems, practices, controls, and procedures that companies utilize to self-manage, ensure transparency within the corporation, and comply with laws and regulations.