Sustainability and ESG

Sustainability and ESG—an introduction

Corporate sustainability, or performance in respect of ‘environmental social governance’ (ESG) criteria, has become increasingly important to investors, customers and employees in recent years. In response to this, there has been a rapid development of ESG criteria (also referred to as ESG metrics or factors) against which the performance of a, usually corporate, entity can be measured and evaluated.

The term ‘ESG’ encompasses three interlinked pillars: ‘environmental, social, and governance’ issues. Briefly, they include some of the following:

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environmental—involves assessing the environmental impacts of an organisations business activities. For example, emissions, pollution, water consumption, and waste caused as a result of their operations
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social—looks at potential human rights risks across supply chains, such as human trafficking, and modern slavery
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governance—looks at the way a company governs itself, for example its code of conduct, recruitment practices, board of directors. The ‘G’ is far broader than the other two pillars, therefore it can be difficult to measure. However, it is essential as without good governance and organisation, considering environmental and social aspects would not be possible

Common

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