ESG, what the acronyms that are transforming business stand for.

We all hear these acronyms over and over again, but do we know what they refer to? ESG criteria refer to environmental, social and corporate governance factors that are taken into account by stakeholders (also known as interest groups) when investing in a company.

ESG stands for “environmental, social and governance”. But do you know what each letter stands for?

E stands for Environmental: it encompasses the effect that companies’ activities have on the environment, directly or indirectly.
S for Social: includes the impact that a given company has on its social environment, i.e. on the community it influences.
G for Governance: refers to the company’s corporate governance.
Investors are increasingly interested in how companies manage their ESG framework and especially their impact on the environment and climate change.

The integration of these ESG elements into a company’s DNA determines its commitment to generating positive impacts on the environment in which it operates, to sustainable economic growth and to the transition to a decarbonized economy for the benefit of the planet.

The focus on ESG criteria has become increasingly important in recent years for investors and consumers especially as they increasingly look for companies that care about the environmental and social impact of their operations. The increased relevance of ESG criteria is mainly due to two factors: 1) call for more transparency and 2) legislative momentum, especially since 2015, both national, European and international.

In future publications we will be explaining and going deeper into these aspects and others.