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  • ESG Everyday

What is ESG?

Updated: Mar 16, 2023

ESG stands for Environmental, Social, and Governance, which are three key factors that are considered by investors and stakeholders when evaluating the sustainability and ethical impact of a company or organization.

• Environmental factors refer to a company's impact on the natural environment, including issues such as climate change, carbon emissions, water and waste management, and biodiversity.

• Social factors refer to a company's impact on society and stakeholders, including issues such as labor standards, human rights, community engagement, and product safety.

• Governance factors refer to a company's management practices and structures, including issues such as board composition, executive compensation, and transparency and accountability.

ESG considerations are increasingly seen as important indicators of long-term value creation and risk management for companies, as well as a way to align business practices with broader social and environmental goals. As a result, ESG investing has gained momentum in recent years, with investors looking to integrate ESG factors into their investment decisions and strategies.

According to Nasdaq Stock Exchange, "ESG generally means a broad set of environmental, social and corporate governance considerations that may impact a company’s ability to execute its business strategy and create value over the long term. While ESG factors are at times called non-financial, how a company manages them undoubtedly has measurably financial consequences. "

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