The meaning of ESG
ESG is a framework used by companies, investors and policymakers to assess the non-financial performance of an organisation. Where traditional financial analysis focuses on revenue, profit and balance sheets, ESG looks at the broader impact of an organisation on people, planet and society.
The term ESG was coined in 2004 by the United Nations in the report "Who Cares Wins" and has since become central to sustainable investing, due diligence and regulation such as the CSRD.
The three pillars of ESG
Environment
Your organisation's impact on climate and nature.
- CO2 emissions and climate risk
- Energy consumption and renewable energy
- Water use and water management
- Biodiversity and land use
- Waste and circular economy
Social
Your organisation's impact on people: employees, suppliers and society.
- Working conditions and safety
- Diversity and inclusion
- Human rights in the supply chain
- Community development
- Customer privacy and data protection
Governance
How your organisation is managed and controlled.
- Board structure and independence
- Remuneration policy
- Anti-corruption and integrity
- Transparency and reporting
- Risk management
Why does ESG matter?
ESG is increasingly less of a choice and more of an obligation. Three developments make ESG urgent for virtually every organisation:
- Regulation: The Corporate Sustainability Reporting Directive (CSRD) requires large and medium-sized companies in the EU to provide extensive sustainability reporting.
- Finance: Banks, investors and shareholders integrate ESG scores into their decisions. A low ESG score can lead to higher financing costs or exclusion from investments.
- Market and procurement: Large buyers and retailers set ESG requirements for their suppliers. Those who do not meet minimum ESG standards lose contracts.
How do you measure ESG performance?
Measuring ESG performance starts with scoping: which topics are material for your organisation and supply chain? Then indicators are set per topic, data collected and scores determined.
ESG Passport provides a standardised framework with 16 ESG topics, assessed on 7 activities per topic with a score from 0 to 10. The platform automates scoping, consolidation and comparison, so you immediately know where you stand and where to improve.
Map your ESG performance
ESG Passport gives you objective insight into your ESG performance, per entity and per chain position, in a compact overview.
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