ESG stands for Environmental, Social, and Governance. These criteria are meant to guide companies in integrating sustainability and ethical responsibility into their strategies and business practices.
- Environment (E): The focus is on reducing environmental pollution, greenhouse gas emissions, and promoting energy efficiency.
- Social (S): This point includes criteria on occupational safety, diversity, and social engagement.
- Governance (G): This is about transparent corporate values and effective control processes.
ESG has gained significant importance in recent years as investors recognize that the associated factors influence financial risks and opportunities. By integrating ESG criteria, they can identify companies that are sustainable and successful in the long term.
Companies that adopt ESG practices benefit from better business results, increased competitiveness, easier access to capital, and stronger customer and employee loyalty. They also contribute to global sustainability goals. Disadvantages include higher costs and the risk that companies not implementing ESG practices may be pushed out of the market.
