Blog

Even big business these days are being evaluated on not normal profitability characteristics, but factors in measuring the sustainability and societal impact the company has on their workers, community, environment, and business practices. ESG rankings are still a work in progress to have uniform measures, but companies are feeling the pressure of making this a priority as both big and small investors have been shunning companies; such as big oil from their investment holdings which can hurt companies in the long run.

Investors of “social conscious funds” have grown greatly in the last 10 years, in which most investors excluded investments in oil, tobacco, and weapons companies. That trend is not slowing down in the near-term due to climate change being one of the biggest challenges the world will need to solve to sustain our way of living. The recent focus on workplace gender and diversity have also shed some light on companies who have an inclusive culture or don’t. Consumers have taken the power in their own hands by boycotting from buying goods and services from companies that fall short on ESG standards. Here are some highlights of each pillar of ESG:

Environmental- conservation of the natural world

• Climate change and carbon emissions

• Air and water pollution

• Biodiversity

• Deforestation

• Energy efficiency

• Waste management

• Water scarcity

Social- consideration of people & relationships

• Customer satisfaction

• Date protection and privacy

• Gender and diversity

• Employee engagement

• Community relations

• Human rights

• Labor standards

Governance- standards for running a company

• Board composition

• Audit committee structure

• Bribery and corruption

• Executive compensation

• Lobbying

• Political contributions

• Whistleblower schemes

It is encouraging to see companies being more transparent about these various ESG areas. If you are curious what US companies out there are deemed to be ESG friendly check out this article below.