ESG (Environmental, Social, Governance): The Three Pillars of Sustainability
ESG (Environmental, Social, Governance) is a framework that evaluates companies’ sustainability performance in three main areas: environmental, social, and governance. ESG criteria examine how companies contribute to environmental protection, manage their social responsibilities, and govern their operations.
How does ESG evaluation work?
Environmental factors: One of the most important elements of ESG is how companies contribute to environmental sustainability. This includes reducing carbon emissions, improving energy efficiency, using renewable energy sources, and sustainable resource use and waste management policies. Environmental efforts play a key role in the global fight against climate change and are receiving increasing attention from investors.
Social factors: The social dimension of ESG examines how companies manage their workforce, community relations, and customer satisfaction. This includes employee safety and well-being, promoting workplace diversity, ensuring rights and equal treatment, and corporate responsibility towards the communities in which they operate. A company’s social performance affects its relationships with customers and partners, as well as employee retention.
Governance factors: The third pillar of ESG examines governance structures and processes. This includes adherence to corporate ethical standards, transparency, board independence, and risk management. Good corporate governance helps ensure that a company remains sustainable in the long term and minimizes legal, financial, and reputational risks.
Why is ESG important?
Considering ESG criteria has become crucial in the world of sustainable investments. More and more investors are placing their money in companies that have a positive impact on the environment, practice ethical business, and make socially responsible decisions. ESG not only serves to reduce risks but also creates opportunities for companies to become more attractive to investors, customers, and talented employees.
ESG-based investments have become a global trend, and more and more companies recognize that long-term sustainability is a fundamental element of corporate success.