ESG: A Step towards Sustainable Development
ESG: A Step towards Sustainable Development
The term ‘ESG’ stands for environmental, social and governance. It is a set of standards used by investors to evaluate companies on their sustainability and social impact.
Environmental criteria consider a company’s greenhouse gas emissions, energy consumption, waste management practices, etc. Social criteria assess a company’s workforce policies, human rights record, treatment of communities near its facilities, etc. Governance criteria examine a company’s board structure, executive compensation practices, shareholder rights provisions, etc. Many investors are interested in ESG investing because they want to support companies that are aligned with their values and are working towards sustainable development. ESG factors can affect a company’s financial performance, so these investors believe that they can make money while also making a positive impact on the world.
ESG investing is a type of responsible investing that considers environmental, social, and governance factors in addition to financial return. The idea is that by considering these non-financial factors, investors can make more informed decisions that will ultimately lead to better financial outcomes. For example, there are now exchange-traded funds (ETFs) that track indexes made up of companies with strong ESG ratings. There are also mutual funds and individual stocks that focus on ESG criteria. There are three main pillars that are typically considered: Environment, Social, and Governance.
Environment refers to the impact of a company’s activities on the natural world. This can include things like greenhouse gas emissions, waste management, and water use.
Social refers to the impact of a company’s activities on society. This can include things like working conditions, employee diversity, and community engagement.
Governance refers to the way a company is run and how it makes decisions. This can include things like board structure, executive compensation, and shareholder rights.
There are numerous benefits to implementing ESG (Environmental, Social and Governance) principles into business that can lead to more sustainable and responsible business that can help preserve natural resources, protect workers and communities, and limit pollution and waste.ESG practices can also improve social conditions for workers, both in terms of their working conditions and in terms of the company’s impact on larger society. Finally, good governance is essential for any successful business. But implementing ESG principles can help ensure that companies are run responsibly and transparently, with a clear focus on long-term value creation. This can help build trust with investors, employees, customers, and other key stakeholders.
There are a number of challenges that need to be considered when implementing ESG initiatives. Firstly, it can be difficult to identify which issues are most important to stakeholders and how these maps onto the three pillars of sustainability – environmental, social and governance. Secondly, there is a lack of standardization around what constitutes an ESG issue and how it should be reported on. Many companies are not yet fully aware of the benefits of implementing an ESG approach and so there is a need for greater education and awareness-raising around the topic.
Name: Ms. Sagarika
Designation: Assistant Professor
Department: Commerce
Email Id :Sagarika.com@patnawomenscollege.in
