ESG stands for Environmental, Social, and Governance is a framework used to measure a company’s perspective and efforts on sustainability and its ethical impact. ESG in the last decade has become central to Finance Function. It helps position the company better for regulators, investors, shareholder and potential employees. – Environmental: This factor evaluates a company’s impact on the environment as a result of its operations and production. It entails carbon emissions, waste management, pollution, and climate change.
– Social: This factor evaluates a company’s impact on society as a whole. It considers labour rules and processes, human rights, community involvement, diversity in employees, and customer satisfaction.
– Governance: This factor evaluates the company’s day to day practices and decision-making processes. It entails board composition, executive pay, shareholder rights and value and transparency protocols.
ESG reporting is the corporate disclosure of sustainability metrics, supported by detailed consumption data for environmental impact assessment.
