As the acronym suggests, ESG criteria include environmental, social, and governance factors. Learn more about what’s included in each category.
Environmental: An ESG policy should consider environmental concerns like climate, pollution, animal treatment, energy use, natural resource conservation, and waste management by ensuring projects and operations pose minimal environmental risks. For example, companies can combat climate change by reducing greenhouse gas emissions, complying with environmental regulations, and properly managing toxic waste.
Social: Social impacts come from a company’s relationships with workers, customers, suppliers, and the community. For example, a company may practice social responsibility by purchasing goods from ethical suppliers or paying its workers a fair rate.
Governance: Governance refers to how a business operates to ensure sound and fair decisions are made.