ESG stands for Environmental, Social, and Governance, and is an investment philosophy and evaluation standard that focuses on non-financial performance of enterprises. It aims to measure the sustainability of corporate development, evaluating the sustainability of business operations and their impact on social values from three dimensions: environmental, social, and corporate governance.
The Three Dimensions of ESG
- Environmental：
- Mainly focusing on the impact of enterprises on the environment, including carbon and greenhouse gas emissions, waste pollution and management policies, energy use and consumption, natural resource use and management policies, biodiversity conservation, compliance, employee environmental awareness, green procurement policies, energy conservation and emission reduction measures, environmental cost accounting, and green technology.
- Enterprises need to take a series of measures to reduce their impact on the environment, such as reducing energy consumption, lowering waste emissions, promoting clean energy, etc. These measures not only help protect the environment, but also reduce enterprise costs and improve competitiveness.
- society：
- Mainly focusing on the impact of enterprises on society, including gender and gender balance policies, human rights policies and violations, health and safety of associations (or communities), management training, labor norms, product responsibility, occupational health and safety, product quality, supply chain responsibility management, targeted poverty alleviation, public welfare and charity, etc.
- Enterprises need to actively fulfill their social responsibilities, safeguard employee rights, protect consumer rights, actively participate in community building, maintain public safety, etc. These measures can help enhance the reputation and image of the enterprise, and strengthen social recognition.
- administer：
- Mainly focusing on the internal management and governance structure of enterprises, including corporate governance, corruption and bribery policies, anti unfair competition, risk management, tax transparency, fair labor practices, ethical codes of conduct, compliance, board independence and diversity, organizational structure, investor relations, etc.
- Enterprises need to establish a sound internal control and risk management system, improve transparency and credibility, and protect the interests of investors. These measures help improve the governance level and efficiency of enterprises, enhance stability and sustainability.
The role and significance of ESG
- Investor perspectiveESG evaluation helps investors identify companies that excel in environmental, social, and governance aspects, enabling them to make more responsible and sustainable investment decisions. ESG investment, also known as Sustainable Socially Responsible Investment (SRI), emphasizes the concept of social sustainability.
- Enterprise perspectiveActively fulfilling ESG responsibilities can not only enhance a company's reputation and image, but also reduce risks and costs, enhance competitiveness and sustainability. ESG management helps companies better respond to market changes and challenges, and achieve sustainable development.
- social perspectiveThe promotion and practice of ESG can help promote sustainable economic and social development, environmental protection, social harmony, and the improvement of corporate governance.
ESG is an important tool for comprehensive assessment of corporate sustainability, which encourages companies to actively fulfill their obligations in environmental protection, social responsibility, and corporate governance while pursuing economic benefits, in order to achieve more sustainable and inclusive development.