ESG stands for environmental, social and governance. These are called pillars in ESG frameworks and represent the 3 main topic areas that companies are expected to report in. The goal of ESG Guidance is to capture all the non-financial risks and opportunities inherent to a company’s day to day activities.
Our world faces a number of global challenges: climate change, transitioning from a linear economy to a circular one, increasing inequality, balancing economic needs with societal needs. Investors, regulators, as well as consumers and employees are now increasingly demanding that companies should not only be good stewards of capital but also of natural and social capital and have the necessary governance framework in place to support this. More and more investors are incorporating ESG elements into their investment decision making process, making ESG increasingly important from the perspective of securing capital, both debt and equity.
ESG today is broadly thought of as a reporting framework, however originally it was a framework developed for evaluating the sustainability related disclosure of listed companies for investors. Now with demand for ESG related information on the rise, the ESG framework has become synonymous with reporting. There is no standard ESG framework (yet), only a broad consensus on the issues covered by it; there can be numerous differences at the data point level. For this reason, companies rely on sustainability reporting standards to determine how and what they report. Our job is to thoroughly teach you the importance of ESG for your organization and how to properly embrace the procedure.