ESG performance is increasingly holding more significance in the business world due to a growing ESG landscape, changing stakeholder perspectives and pressure from shareholders. Investors are interested to deploy capital to businesses that plan to create positive tangible environmental and social results alongside their financial returns. Investors therefore want to influence decision making towards results that they believe in.
In 2022, the Securities and Exchange Commission (SEC) proposed new policies to enhance and standardize the climate-related disclosures that registrants make.
The term ESG stands for:
- Environmental: Systematic approaches to integrating environmental responsibilities into business operations and decision-making processes
- Social: Strategies to address social issues such as labour policies, human capital, diversity, DEI, human rights and community integration.
- Governance: includes sovereign policy making, organizational management, stakeholders, board of directors, managers, and shareholders.
It is fundamentally an inclusive concept, that considers human development and progress in terms that encompass business and economics; production and consumption; prosperity; environmental protection; well-being and health; justice (both social and environmental); inclusiveness and governance. From a business perspective, ESG reporting is important to demonstrate how corporate purpose is brought to life and supports creating long-term value. It can also strengthen corporate reputations and trust with stakeholders.
We follow Global Reporting Initiative (GRI) Standards, Task Force on Climate-related Financial Disclosures (TCFD), and SASB Standards, ESG frameworks for reporting.