Environmental, Social, and Governance (ESG) is a concept of sustainable corporate management that integrates environmental, social, and governance factors into business decisions. Companies that implement ESG principles focus on CO₂ reduction, resource conservation, and social responsibility while ensuring ethical corporate governance.

In the EU, ESG plays a crucial role, particularly due to regulatory requirements such as the Corporate Sustainability Reporting Directive (CSRD). A well-thought-out ESG policy not only helps companies meet legal requirements but also creates long-term sustainable value. In the context of climate strategy, ESG is closely linked to CO₂ reduction and sustainable investments. Companies that consistently adhere to ESG criteria enhance their transparency, reduce risks, and improve their competitiveness.

Companies that integrate ESG criteria into their strategy benefit not only from improved risk management and regulatory compliance but also from long-term competitiveness. FORLIANCE supports businesses with comprehensive climate consulting to develop sustainable strategies and effectively implement CO₂ reduction measures. Additionally, we assist companies in preparing their CSRD reporting, ensuring they meet increasing regulatory requirements and transparently present their ESG performance. Through tailored solutions, FORLIANCE helps integrate ESG principles effectively into business processes and create sustainable value.

Environmental, Social, and Governance (ESG) refers to a concept of sustainable corporate management that integrates ecological, social, and ethical aspects into business decisions. It includes environmental criteria such as emission reduction and resource conservation, social responsibility regarding working conditions and human rights, and governance factors like transparency and corporate ethics.

ESG serves as a benchmark for investors, regulatory authorities, and stakeholders to assess a company's sustainability performance. By implementing ESG-compliant strategies, businesses can minimize risks, meet regulatory requirements, and create long-term economic and societal value.

UNDERSTANDING ESG CRITERIA

• Environmental: This aspect examines the impact of a company’s activities on the environment. Key factors include carbon emissions, waste management, resource use, energy efficiency, and biodiversity conservation.
• Social: This dimension looks at how a company manages relationships with employees, suppliers, customers, and the communities where it operates. Important factors include labor practices, human rights, community engagement, and customer satisfaction.
• Governance: This criterion assesses the company's leadership, executive pay, audits, internal controls, and shareholder rights. It includes evaluating the diversity and structure of the board, transparency in reporting, and adherence to corporate governance principles. 

IMPORTANCE OF ESG CRITERIA FOR INVESTORS

The increasing focus on ESG criteria reflects evolving social values and the recognition of the importance of sustainability. Investors are paying more attention to environmental and social issues, such as climate change, wage equality, diversity, data protection, and financial inclusion. ESG criteria help investors assess risks and opportunities that traditional financial analysis might overlook. 

Rating agencies and investors emphasize the need for consistent and comparable sustainability data to evaluate companies effectively. This helps in making informed investment decisions and ensuring that investments contribute to long-term sustainability goals.  

GLOBAL RELEVANCE OF ESG CRITERIA

The importance of ESG criteria has grown globally, particularly highlighted during the Covid-19 pandemic and subsequent economic and social crises. The ESG Investment Observatory in March 2021 indicated that major asset managers worldwide are integrating ESG factors into their investment policies. 

The World Economic Forum's Davos Agenda has underscored the impacts of climate change on the economy and society, promoting sustainability and inclusive economic practices. The 2020 manifesto for sustainability and an inclusive economy calls for companies to collaborate with stakeholders to create shared and sustained value. 

In the European Union, significant legislative progress has been made, including the creation of a taxonomy for environmental economic activities based on objectives like climate change mitigation, water resource protection, transition to a circular economy, pollution prevention, and biodiversity protection. The European Green Pact ensures that all policies and legislative proposals incorporate sustainability aspects.