What is ESG?
ESG stands for Environmental, Social and Governance, the factors companies integrate as part of their business strategy.
Why is ESG important?
Adopting an ESG approach is important for companies as it enables them to conduct their business in a manner that is consistent with their values and meets the expectations of their stakeholders. This approach helps to mitigate risks and avoid harm to their reputation. Furthermore, a company’s ESG performance impacts its financial results, ability to acquire funding, and retain employees.
What is included in ESG?
The letter “E” in ESG stands for various environmental factors, such as energy efficiency, carbon footprints, greenhouse gas emissions, deforestation, biodiversity, climate change, pollution mitigation, waste management, and water usage.
The letter “S” stands for social concerns, including labor standards, wages and benefits, diversity in the workplace and board, racial justice, pay equity, human rights, talent management, community relations, privacy and data protection, health and safety, and supply chain management, among other issues related to human capital and social justice.
Finally, the letter “G” pertains to the governance of the “E” and “S” categories, such as corporate board composition and structure, strategic sustainability oversight and compliance, executive compensation, political contributions and lobbying, and bribery and corruption.
What is the difference between CSR and ESG?
CSR is thought of as a qualitative approach that is driven by internal values and commitments, while ESG is considered quantitative and driven by external requirements (i.e., international frameworks and standards). While the two concepts have some key differences (see table above), it is important to note that both seek to set goals for and report out on social and environmental impacts (mitigating negative ones and enhancing positive ones).
What is the difference between CSR and corporate governance?
The concept of corporate governance is actually a sub-topic of CSR. It refers to the system of rules, practices, and processes by which a company is directed and controlled.
What is the difference between CSR and social responsibility?
Corporate social responsibility is the idea that businesses have a responsibility to benefit the society that they exist within. It is viewed as a form of social responsibility but is used specifically in the corporate business world.
