ESG stands for environmental, social, and (corporate) governance. It is a set of practices and metrics used to evaluate a company beyond its financial performance.
In other words, ESG practices and metrics offer a way to measure a company’s health and stability beyond what may be deduced from the numbers on its balance sheet.
The“E” in ESG means the environmental responsibility companies have, includingenergy use and how they manage their environmental impacts as stewards of the planet
The“S” in ESG refers to social responsibility companies have, covering a widerange of topics from how companies are fostering people and culture todiversity statistics and community impact
The“G” in ESG covers how companies are directed and controlled—and how leaders are held accountable
Envision ESG in practice through the following examples:
Environmental topics:
- Minimizing carbon footprint to fight climate change
- Maximizing efficiency of water use and waste generation in industrial process
- Using renewable energy throughout the value chain
Social topics:
- Giving back to the communities in which the company operates
- Creating an equitable and safe working environment
- Treating customers with dignity and respect
Governance examples:
- Offering pay transparency and pay equity across the organization
- Assembling a diverse board of directors
- Holding employees and leaders accountable for unethical practice
