Environmental, social and governance issues

There are key environmental, social and governance (ESG) matters that organisations need to consider in the context of their corporate governance. On these, it may be useful to refer to Practice Note: Environmental, social and governance issues—fundamentals.

What is ESG?

ESG is an umbrella term used to refer to the environmental, social and governance issues or aspects of an activity. In the context of corporate governance, the Chartered Governance Institute (CGI) describes ESG as covering:

•
Environmental—the company’s impact on the natural environment and the environment’s impact on the company, including climate change impacts, direct impacts (the company’s own activities) and indirect impacts (throughout its value chain, including suppliers and customers or investments)
•
Social—interactions with, responsibilities towards, and impact on stakeholders
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Governance—compliant and ethical conduct of the company’s business, in line with its purpose and enabled through effective decision-making

ESG is closely aligned with the concept of corporate social responsibility (CSR) and that of responsible investment. CSR, also known as corporate responsibility or corporate citizenship, is a business management or governance concept whereby an organisation aims to create a positive impact,

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