Much has been said in recent years about the importance of ESG in the corporate world. But do you know what it means, and how to turn your business into a legitimate ESG?
ESG is an acronym for Environmental, Social, and Governance. But what does this new concept mean?
Environment
The environmental factor takes into account the use of the company's natural resources and the effect of its operations on the environment, both in its direct operations and in its supply chains, avoiding exposure to high levels of financial risk, regulatory sanctions, criminal proceedings , and all other possible damages that present a risk of impairing shareholder value.
Environmental criteria consider how a company safeguards the environment
Carbon and Gas emissions
Use of renewable energy sources
Waste and pollution management
Natural resource conservation
Social
The “S” is about a company's strengths and weaknesses in dealing with social trends, labor, and politics. Social factors are primarily those that will arise in the relations between a company and people or institutions outside of it. It don't just depend on how consumers will judge a company’s behavior, it also includes labor issues, relationship with its employees, fair working conditions, employee training, and others issues to be considered when examining how a company handles its social relationships.
Social criteria examine how the company manages relationships with employees, suppliers, customers and the communities in which it operates.
Workplace conditions
Ethical work relations
Supports and encourages diversity
Pays fair wages and benefits
Training and qualification programs
Governance
The “G” in ESG is essentially about how a company is managed by those in the top floor executive offices, and how well do executive management and the board of directors attend to the interests of the company’s various stakeholders – employees, suppliers, shareholders, and customers. Understanding governance risks and opportunities in decision-making is critical, as poor corporate governance practices have stood at the core of some of the biggest corporate scandals.
Accurate and transparent accounting methods
Pursues integrity and diversity in selecting its leadership
Accountable to shareholders.
Avoid conflicts of interest in board members
Governance deals with a company’s leadership, executive pay, audits, internal controls, and shareholder rights.]
Nowadays, regardless of size and segment, it is essential that the ESG pillars are part of the positioning and culture of every company.
Z&Z Group is a consultancy specialized in adapting companies to ESG parameters. Click on the buttom below and we will contact you.
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