Environmental, social and governance (ESG) criteria are a set of standards for a company’s operations that socially conscious investors use to screen potential investments.
The evolution in how businesses and their stakeholders consider ESG has been accelerated by the pandemic, as has industry engagement with COP26 (Conference of the Parties held in 2021), and a commitment to support climate goals.
However the largest barrier to driving change and cementing an ESG agenda within overall strategy is board buy-in. A recent survey conducted by EY, the Long-Term Value and Corporate Governance Survey, stated that more than four in five of the professionals surveyed (84%) stated that their stakeholders are increasingly expecting their companies to be a force for good in terms of environmental and social sustainability. This was a 20% increase on the captured data from the previous year. However the survey highlighted that many professionals felt that board members are hampering progress towards a future in which ESG is properly embedded in strategy.
Fortunately executives that share a passion for making a difference to the planet and people are moving up the ranks. The most important part of starting to adopt an ESG programme is ensuring any claims made are genuine and there is data to back it up.