Improve your ESG score with this simple guide and get answers to the following questions: What is ESG Governance? What are the ESG Factors? What are the ESG Criteria? How to Implement ESG?
Published 17 Feb 2023
ESG governance is an assessment of a company’s leadership and management. It focuses on how the executives of a company run the business and if it’s done in an ethical and fair way. Different industries and business types will also have their own definitions, metrics, and priorities when it comes to attaining the common goal of conducting business in an ethical and fair manner.
The exact definition of ethical and fair tends to be subjective, even if ESG is considered to be a more quantifiable form of Corporate Social Responsibility (CSR). This article aims to show how you could go about implementing ESG according to your organization.
The multitude of ESG criteria is typically divided into 3 major categories, which are also known as the ESG factors: (1) Environmental; (2) Social; and (3) Governance. The specific ESG metrics and the weight of each factor is ultimately decided by the company’s chosen ESG ratings provider or rating agency. Unlike other industry standards and best practices, ESG is measured by private organizations such as MSCI, Sustainalytics, S&P, ISS, and Bloomberg.
According to Bloomberg Intelligence, the ESG factor that drives excess returns (i.e., returns that perform better than expectations, projections, or benchmarks) is governance. However, this doesn’t mean that the other two factors should be neglected. Instead, companies should strive to be well-rounded in their ESG performance.
Common criteria for ESG factors include the following:
The key to implementing ESG is to take action instead of relying on policy-making. A quote by Anywhere Sikochi (who is a co-author of the paper Why is Corporate Virtue in the Eye of the Beholder? The Case of ESG Ratings) in an article written for Harvard Business School Working Knowledge states that, “We’d rather see that a company has planted trees, instead of seeing that they have policies about not destroying trees.”
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Though your company’s ESG score is up to the ESG ratings provider, SafetyCulture can help you take action towards a better ESG score and make long-lasting improvements that investors will notice. Ensure that your company remains an attractive investment by using SafetyCulture, a digital operations platform available as a web-based software and as a mobile app on iOS and Android.
SafetyCulture features for ESG include the following:
Other SafetyCulture products:
Erick Brent Francisco
Erick Brent Francisco is a content writer and researcher for SafetyCulture since 2018. As a content specialist, he is interested in learning and sharing how technology can improve work processes and workplace safety. His experience in logistics, banking and financial services, and retail helps enrich the quality of information in his articles.
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