What is ESG?

Nearly all supplyFORCE current and prospective clients have goals focused on Environmental sustainability, Social diversity, inclusion & impact, and sound corporate Governance.  

 So, what exactly is ESG (Environment, Social, & Governance)? 

ESG is a framework for viewing business risk, responsibility, and long-term sustainability. Its evolution is rooted in previous frameworks like the 1990s Triple Bottom Line of people, planet, and profit, as well as the United Nations Principles for Responsible Investing in the early 2000s, which led to more corporate social responsibility discussions in boardrooms and on Wall Street. The use of the term ESG became more common in the 2010s and continues today.  

The E stands for Environmental and is often combined with sustainability. When we talk about a long-term approach to using the resources found in our natural environment, our focus is on using them more sustainably and renewably. We live in a finite world, so if we use every resource extracted from the planet for just one use, we will eventually find ourselves in a world without the required resources for survival.    

Naturally, the environmental focus includes finding ways to become more sustainable with the materials we use and the environments in which we interact (forests, rivers, oceans, etc.) and lowering the amount of waste we generate or emit (carbons/gasses, chemicals, and other wastes) 

The S of ESG represents the social side of a business – how a company treats its employees, suppliers, communities, and customers. Social initiatives and activities include the promotion of employee diversity, fostering inclusive cultures, and delivering positive community impacts. Some specific examples include protocols for employee safety, community volunteer programs, hiring policies, and educational opportunities. The social piece of ESG affects the culture and perception of the company. To be effective, both environmental and social programs must be reinforced by the governance of business.  

Governance, the G of ESG covers the rules, practices, and processes used to manage a business.  The responsibility for setting the groundwork and driving governance of an organization lies with the company’s Board of Directors and senior leadership teams. Good corporate governance typically views a robust environmental policy and solid social programs as essential business functions.  

All three areas, Environmental, Social, and Governance, combine to form a long-term strategy for operating a business, focused on risk management, sustainability, and transparency.  

For additional insight into ESG, read here!