ESG (Environmental, Social, Governance): The Three Pillars of Sustainability Approach

ESG (Environmental, Social, Governance) is a framework that evaluates the sustainability performance of companies in three main areas: environmental, social, and governance aspects. ESG criteria examine how companies contribute to environmental protection, how they manage their social responsibility obligations, and how they govern their operations.

How ESG Evaluation Works

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, as well as the sustainable use of resources and waste management policies. Environmental efforts play a key role in the global fight against climate change and are increasingly receiving attention in investor circles.

Social Factors: The social dimension of ESG examines how companies manage their workforce, community relationships, and customer satisfaction. This includes worker 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 impacts 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 adhering to corporate ethical standards, transparency, management independence, and risk management. Good corporate governance helps ensure that the company remains sustainable in the long term and minimizes legal, financial, and reputational risks.

Why ESG is Important

Taking ESG criteria into account has become crucial in the world of sustainable investments. An increasing number of investors are placing their money into companies that positively impact the environment, follow ethical business practices, 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 companies are recognizing that long-term sustainability is a fundamental element of corporate success.

Back to the glossary