ESG

ESG stands for Environmental, Social, and Governance. It is a framework used to measure a business’s non-financial performance in these three categories. ESG is the basis for various regulations such as the NFRD, CSRD, and SFDR.

The increasing interest in ESG measurement and ranking by investors and businesses reflects the view that environmental, social, and governance factors are crucial for business success.

Environmental factors include policies on climate change, decarbonization efforts, natural resource management, pollution control, waste management, and more.

Social criteria encompass human rights, labor standards across the supply chain, community integration, and other social dimensions.

Governance covers business ethics, regulatory compliance, accurate accounting, executive salaries, shareholder structures, and the pursuit of integrity and diversity in leadership selection.

Main critique of ESG reporting is the “say-do” gap both with respect to business actions and their policy advocacy.​

A global standard shall be developed on what companies can and cannot label “ESG,” most promising is the initiative by the International Sustainability Standards Board (ISSB).​

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