ESG (Environmental, Social, Governance)
ESG stands for Environmental, Social, and Governance , the three pillars used to evaluate a company’s sustainability performance and ethical impact. Originally developed as an investment framework, ESG has become the standard lens through which stakeholders assess corporate responsibility.
Environmental factors include:
- Greenhouse gas emissions and carbon footprint
- Energy efficiency and renewable energy use
- Waste management and circular economy practices
- Water usage and pollution
- Biodiversity impact
Social factors include:
- Employee health, safety, and wellbeing
- Diversity, equity, and inclusion
- Labour rights and fair wages across the supply chain
- Community engagement and social impact
- Data privacy and customer protection
Governance factors include:
- Board composition, diversity, and independence
- Executive compensation alignment with sustainability goals
- Anti-corruption and ethics policies
- Risk management and internal controls
- Transparency and shareholder rights
ESG data is consumed by multiple stakeholders for different purposes:
- Investors use ESG scores to assess risk and allocate capital (ESG funds now manage over $30 trillion globally)
- Regulators require ESG disclosures through frameworks like the CSRD and EU Taxonomy
- Rating agencies like EcoVadis and CDP score companies on ESG performance
- Customers increasingly factor ESG into procurement decisions
The proliferation of ESG reporting standards is being addressed by convergence efforts , the ESRS in Europe and the ISSB standards globally aim to create consistent, comparable disclosure frameworks.
Dcycle’s ESG platform centralises environmental, social, and governance data, making it easier to report across multiple frameworks from a single source of truth.
Related terms
