What does the term ESG mean?
ESG stands for Environment, Social and Governance. It is a framework for evaluating a company’s performance and creating an impact.
Think of it like a report card, that measures how well companies are performing in terms of environmental sustainability, social responsibility and corporate governance.
When we imagine an environment friendly company as a human being, we are evaluating how “green” the company’s actions are.
Companies with good ESG practices invest in renewable energy, reduce carbon emissions, and implement environmentally friendly initiatives.
On a Company level, it’s also important to evaluate how socially responsible an entity is in respect to the interactions with their customers and stakeholders
This includes aspects such as fair labor practices, diversity and inclusion, social participation, and human rights.
It is also important to evaluate how well a company manages its affairs, adheres to ethical standards, and ensures fairness in decision-making.
This includes things like board structure, executive compensation, transparency, and ethical business practices.