What is ESG, and why is it important? This article dives into exactly what ESG is, and why investors are now more interested in it.
ESG is an Environmental, Social, and Governance acronym. ESG takes the holistic view that sustainability goes much deeper than environmental issues.
Basically, ESG is a framework that helps stakeholders and investors understand how an organisation is managing risks and identifying opportunities related to environmental, social, and governance criteria. Let’s explore each criterion in more detail.
Environmental criteria refer to an organisation’s environmental impact and risk management practices, i.e. any environmental risks a company might face, and how the company is managing those risks.
Environmental issues can include factors such as:
Anteagroup provides some excellent insights into why environmental issues are important when it comes to ESG.
The social aspect looks at an organisation's relationship with all its stakeholders (internal and external).
Social factors include:
This article from Reuters provides more details on how investors are engaging with ESG's social aspects.
Many times, the "G" element is overlooked when considering the “E” and “S” factors.
However, understanding governance risks and opportunities is critical, as poor corporate governance practices have stood at the core of some of the biggest corporate scandals (VW Emissions Test). At its most basic level, governance refers to how an organisation is led and managed.
Governance issues can include:
Investors can screen for practices that relate to governance (just like the ‘E’ and ‘S’). When companies with governance policies and practices pose an unacceptable risk, investors can rule out these companies. A business involved with ethically questionable practices can be an example of a negative screen. A positive screen could include businesses that have robust and transparent governance policies.
Simply put, investors care about ESG scores because it makes sound investment sense. ESG is rapidly growing and evolving, as many investors look to incorporate ESG factors into the investment process. There are also a growing number of ESG rating agencies and reporting frameworks, all of which have evolved to improve the transparency and consistency of the ESG data. When it comes to ESG scores, why it matters, and how it’s calculated, we provide all the information you need in our blog.
ESG is more than just ticking the boxes. For us, it’s about making a meaningful difference for your business. Our team of passionate experts are ready to put in the work with you, by combining real-world experience with a commitment to change. In the world we live in today, a business’s success is no longer measured by profits alone. Businesses need to take bold steps to put ESG at the heart of their operations, and we can help by adding significant value to your ESG scorecards with our solid waste management strategies.
ESG scorecards are strongly influenced by your waste management strategy, as well as your reduction of landfill waste.
By understanding this clearly, we can assist you in the following ways:
Speak to one of our experts today, and future-proof your business with responsible waste management and high ESG ratings.