Sustainability is ubiquitous and we encounter it almost everywhere. Nevertheless, it is often unclear which product or which supplier is sustainable and what exactly that means. This is because sustainability is a complex topic with many dimensions. In order to assess the sustainability of companies and make it comparable, the so-called ESG criteria were developed and have now become established as a standard. But what are ESG criteria actually?
ESG criteria are a set of standards for a company's operations that make it possible to evaluate a company's sustainability. In these criteria, the abbreviation ESG stands for environment (Environment), social (Social) and responsible corporate management (Governance). Verifiable criteria are defined for each of the three dimensions.
The environmental criteria mainly cover aspects relating to environmental and climate protection. Among other things, a company's energy consumption, water use, waste disposal, environmental pollution and the conservation of natural resources are considered.
The social criteria cover all social impacts of the company's activities. The top priority here is respect for human dignity. In addition, the situation of a company's employees, a company's value chain (suppliers, vendors) and a company's social commitment are considered.
The criteria around responsible corporate governance mainly cover a company's ethical behavior, paying particular attention to fairness and transparency. Among other things, diversity and equal opportunities, compliance with laws, communicated corporate values and a company's measures against corruption are considered.
In this way, ESG criteria take into account information about companies that goes beyond the traditional financial indicators and thus enable a holistic view of a company.
Sources: Investopedia (translated) and Klimavest
Damage good. All good.
