The terms ESG (Environmental, Social, Governance) represent a series of specific metrics focused on valuing such factors – environment, social, governance – of a company. These three elements are fundamental to verify, measure, and support the effort in terms of sustainability of an enterprise or organization.
The ESG are important because they enable the precise measurement, on the basis of standardized and shared parameters, of the company’s environmental, social, and governmental, performances.
The finance sector is utilizing always more these criteria to decide the right investments to made. The investors that choose to capitalize the companies with good feedbacks, is because they believe they can affront better the risks linked to emergences or crises situations. As well, they are capable to respect better the always stricter norms from the environmental point of view. Moreover, the societies with high ESG’s scores demonstrates the effort in terms of scientific, innovative, and transparent (towards clients and partners) research.
The acronym ESG stands for:
- E – Environmental: environmental criteria that value how the company behave towards the environment and in general.
- S – Social: relative criteria to the social impact that examine the impact in relation of the company with the field, people, employees, suppliers, and clients. As well, with the general community that is art of the company’s environment.
- G – Governance: criteria that are linked with the business’s governance inspired by good practices and ethical principles. In this ambit, the most treated themes regard the linked logistics to the directors’ retribution: the respect of actionists’ rights, transparency towards the choices made by the companies, the respect of the minorities.
The financial sector is utilising always more the ESG’s criteria, which are important to choose future investments.
The benefits obtained by the companies, that respect these indicators, are principally in terms of reputation and performance.
The investments based on the ESG’s principles reduce the exposition to a wide series of risks, by which controversies and legal disputes increase the wallets’ resiliency. The ESG’s criteria are strictly linked to Agenda 2030 and to its Goals of Sustainable Development.
