ESG, which stands for Environmental, Social, and Governance, originated from Socially Responsible Investment (SRI) and aims to evaluate company value from the perspectives of environmental, social, and governance aspects. The ESG concept and evaluation system include the following main factors:
E- Environment
Examining a company's performance in environmental protection, natural resource utilization, and pollution management.
S- Social
Assessing whether a company practices social responsibility in its operations.
G- Corporate Governance
Evaluating a company's performance in risk management, legal operation, and other aspects.
ESG ratings and standards are rapidly expanding and diversifying, according to a report by the World Business Council for Sustainable Development (WBCSD). Currently, there are over 600 ratings and standards worldwide, with more than 2,000 individual ESG reporting indicators.
This proliferation reflects the growing importance of environmental, social, and governance factors in business decision-making. ESG ratings and standards provide a framework for companies to assess and communicate their sustainability performance, helping investors and stakeholders make informed decisions. As the ESG landscape continues to evolve, it is crucial for companies to stay updated on the latest standards and integrate ESG considerations into their strategies.
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