What is ESG ?

Environmental, social, and corporate governance, is a set of criteria through which a company can be measured in terms of its ethics and sustainability, providing a measure of the degree to which the company is futureproof, outside of simply its financial performance. 

What criteria that makes up ESG? 

ESG stands for Environmental, Social, and Governance — of which are the three criteria used to evaluate a company’s sustainability, ethics, and long-term resilience. ESG provides a well-rounded overview of how well an organization manages risks and opportunities linked to environmental impact, social responsibility, and governance structures.

The ESG analysis is increasingly used by many responsible investors as a way to determine the long term success of a company.

ESG is broken down into the three following categories:

• The environmental criteria typically considers to what extent the company addresses its harm on the environment through areas such as emissions management, which can be determined through a carbon footprint report. 
• The social criteria looks at areas such as employee pay, employee satisfaction, supplier relations, and the effect on the community in which it operates. 
• The governance criteria looks at company leadership systems, executive pay, audits, and internal controls. 

‍All of these criteria can be factored into a larger score to assess the level of harm or benefit that a company is having in its ecosystem. As legislation is changing and becoming more strict in terms of what damage companies are allowed to do, these principles are becoming more of an indicator of the long-term lifespan of a company, and its ability to prosper in the future. 

For more information, check out Greenly’s blog articles on this subject:“What is ESG”

ESG has become increasingly important as investors, regulators, and consumers have now made sustainable business practices a priority – especially as environmental regulations such as the ESRS and CSRD now require many companies to disclose ESG-related data. 

Ultimately, ESG is now closely tied to compliance, access to capital, and brand reputation –making it imperative for organizations to understand how their ESG factors are currently affecting their business. 

FAQ

Why is ESG important for businesses?

ESG is important for businesses as it helps to better organize potential business risks, improve transparency, and demonstrate accountability – all of which strengthen stakeholder trust and ensure long-term business success.

How does ESG reporting work?

ESG reporting works by tracking and disclosing metrics related to an organization’s environmental impact, social policies, and governance practices. Frameworks like ESRS, CSRD, and GRI guide companies on how to successfully share their ESG data.

How does Greenly support ESG initiatives?

Greenly helps businesses measure, manage, and improve ESG performance by offering tools for carbon tracking, regulatory compliance, and sustainability strategy development – all of which help to ensure compliance with major frameworks.