What is ESG?

In recent years, the term ‘ESG’ has become quite the buzzword, especially in the world of business, but what does it actually mean? ESG stands for Environmental, Social and Governance and is a set of criteria used to evaluate how a company impacts both society and the environment! In this blog we hope to remove all the buzzwords and jargon to shed light on what ESG actually means, and how important it really is!

Environmental Factors (E)

The "E" in ESG as we know stands for Environment. This looks into how a company reduces their environmental impact and looks for areas of improvement. Key areas include:

• Carbon emissions and climate change
• Renewable energy adoption
• Water and waste management
• Biodiversity protection
• Pollution control and waste reduction

Social Factors (S)

The "S" in ESG represents social criteria, this is basically how a company interacts with its employees, customers, communities, and other stakeholders! Social factors encompass:

• Employee welfare and fair labour practices important in the manufacturing industry!)
• Diversity, equity, and inclusion initiatives
• Customer satisfaction and data privacy protection
• Community engagement and support
• Supply chain ethics and responsible sourcing

Governance Factors (G)

The "G" in ESG stands for governance. In easy terms, this focuses on how the business is run and what influences decision making! Key governance aspects include:

• Transparent management of the business, i.e., no shady business!
• Ethical business practices and anti-corruption measures, we are talking absolutely no bribery.
• Board members who don’t have a financial interest in the company (and can give unbiased advice!)

By embracing ESG businesses can build a better brand image by showing they’ve got nothing to hide! Today, ESG is such an important part of any business, by proactively addressing environmental, social, and governance factors, businesses can attract more customers whilst enhancing their brand reputation and demonstrating their commitment to a more equitable world!

Were you familiar with the term ESG before reading this blog? Let us know in the comments below!