In the course of the last few years, a rethinking within society on environmental and social issues has become increasingly noticeable. Companies are particularly affected by this. Instead of focusing purely on economic profits, they should increasingly move in the direction of holistic sustainable management and commitment. “Sustainable” is already the buzzword of the hour around which everything revolves when it comes to ESG! But what is behind the three letters?
The acronym ESG stands for Environmental, Social and Governance and represents the three fundamental sustainability-related areas of responsibility of companies. With these so-called ESG criteria, it will be possible in the future to evaluate and map the sustainability of a company as well as its contribution to society. Let us first take a brief look at the individual areas of responsibility:
The first category of the three ESG criteria focuses on the environmental aspect. More specifically, it is about the reciprocal relationship between business and nature. As you know, your company can have both a positive and a negative impact on the environment through its economic activities. Examples of this would be dealing with climate change, the responsible use of limited resources, reduction of the ecological footprint or even sustainable energy management.
The second category of ESG criteria addresses social issues, such as working conditions and occupational health and safety, respect for human rights and much more.
The third condition of the ESG criteria is about sustainable and responsible corporate governance. This includes, for example, risk and reputation management, the fight against bribery and corruption or data protection.
Figure 1: The three ESG-criteria
When taking a closer look at the ESG criteria, a distinction can also be made between two perspectives. These are the inside-out perspective and the outside-in perspective. The former is about the influences a company has on its environment. The outside-in perspective, on the other hand, refers to the influence of the environment on the company. What they have in common is that they deal with the risks and opportunities of a company.
You may ask why this distinction is important? Well, the issue of sustainability is of course not only about how your company is affected but also about what you do for society. This leads us to the all-important question…