3 FACTS ON ESG
We touched on the timely topic of ESG in our latest 55 minute of Reinvention Session. As a recap, this post provides a quick primer on ESG, its origins, meaning and applications. Want to dive in deeper? Watch the full video our last session below.
(1) Where does ESG come from?
ESG has been in the game for a while. It was first used in 2004 by financial analyst Ivo Knoepfel who prepared the UN study „Who Cares Wins“ where the acronym ESG appeared for the first time. The study marked the birth of ESG, and a further development of the concept of sustainability from the previously dominant concept of corporate social responsibility (CSR).
(2) What does ESG actually mean?
ESG stands for environmental, social and corporate governance. A company’s ESG score can be calculated through different factors in each of the categories (E, S, and G) and measurements. The factor environment, for example, consists of resource use, emissions, and innovation – just to mention a few. Dimensions of the social factor could include workforce, human rights, community, etc. The third criterion, governance, includes management, shareholder structure, and CSR strategy. Here’s an overview of the ESG categories and their meaning at a glance:
(3) ESG: A driver for reinvention
In the context of sustainability, ESG should motivate companies to reinvent themselves for the better. Financial markets will use it as a new framework to prioritize future investments. On the other hand, consumers, a.k.a. educated decision-makers, expect companies to actively protect the environment and help tackle social issues. As a result, companies need to be more engaged than ever before. And this is where we come full circle.
A good way to understand how is applied in practice is the Global Reporting Initiatives (GRI). GRI provides reporting standards that companies can use as a guide.
AFTERMOVIE 55 MIN OF REINVENTION: ESG – CHANGING PERSPECTIVE BY DETLEF GÜRTLER
What questions do you have about ESG? Does it provide a meaningful framework for organizations? Leave your thoughts in the comments!