What is ESG and why is it important?
Bijgewerkt op: 26 feb.
Environmental, Social and Governance (ESG) refer to three central factors in measuring an organisation’s sustainability and societal impact.
According to the UN, 68% of the world's population is projected to live in urban areas by 2050. With ever-growing cities, new challenges arise, but population growth also opens the door for many fascinating solutions. That is why we have an open call for challenges related to ESG problems.
ESG covers three core pillars:
Environmental considers how companies use energy and manage their environmental impact. Factors considered are energy efficiency, climate change, carbon emissions, biodiversity, air and water quality, deforestation, and waste management.
Social considers how companies foster their people and culture, and how that has ripple effects on the broader community. Factors considered are inclusivity, gender and diversity, employee engagement, customer satisfaction, data protection, privacy, community relations, human rights, and labour standards.
Governance considers a company's internal system of controls, practices, and procedures and how an organisation stays ahead of violations. Factors considered are the company’s leadership, executive compensation, audit committee structure, shareholder rights, bribery and corruption, lobbying, political contributions, and whistleblower programs.
ESG criteria are intended to benefit society and diverse stakeholders such as investors, customers, employees, and community members in ways other than economic gains.
ENVIRONMENT | SOCIAL | GOVERNANCE |
Climate change strategy Biodiversity Water efficiency Energy efficiency Carbon intensity Environmental Management system | Equal opportunities Freedom of association Health and safety Human rights Customer responsibility Product responsibility Child labour | Business ethics Compliance Board independence Executive compensation Shareholder democracy |
How ESG relates with the UN Sustainable Development Goals
Some businesses are moving beyond the standard ESG approach and are based on the SDGs which offer a realistic framework for ESG mapping at a higher level and can help to increase the adoption of sustainable investing, encourage responsible corporate behaviour, and integrate sector and business specific ESG factors with broader social issues and global environmental goals. Long-term value development for business and society is the goal of ESG-based investment decisions.
This is a natural fit with the SDGs, founded on globally shared values, social expectations, and a sustainable and inclusive approach to economic growth and well-being. SDGs are global goals set out by the United Nations, whereas ESG is a rating system used by companies to measure their environmental and social credentials.
GPSW and SDG11
Make cities and human settlements inclusive, safe, resilient and sustainable.
The world’s population is constantly increasing. To accommodate everyone, we need to build modern, sustainable cities. For all of us to survive and prosper, we need new, intelligent urban planning that creates safe, affordable and resilient cities with green and culturally inspiring living conditions.