The abbreviation ESG has found expression in the corporate world and the financial sector as an umbrella term for sustainability. Large investors and institutional investors in particular are attaching more and more importance to the inclusion of the sustainability aspect.
The ESG criteria cover the environmental, social and governance aspects of the environmental aspect.
Within the environmental aspect, the strategy for climate protection, the careful management of resources and the use of renewable energy are of particular importance. Social obligations include ensuring fair working conditions, providing employees with access to further training and investing in workplace safety and health. Human rights must be respected and forced labour and child labour must be excluded. Responsible corporate governance means that independent supervisory bodies ensure that corruption or anti-competitive behaviour cannot take place. In addition, most companies have introduced performance-related remuneration for board members to create an incentive for achieving sustainable goals.
The aim here is to be able to evaluate the sustainability of a company. The criteria are measured by rating agencies, and the different areas are given different weightings.
Since 2017, listed companies in Europe are obliged to regularly prepare a sustainability report, which is often provided in the notes to the balance sheet within the management report.