By John Dolan, Rogers Communications Canada; Arnold Murphy, SCTi; Michael Glaser, Cox Communications; Allison Richards, Charter Communications; Ken Nickel, Quest Controls, Inc.; John Teague, Worldwide Environmental Services
Environmental, Social and Governance (ESG) is a framework within the umbrella of sustainability. It is used to describe and measure an entity’s behavior with respect to environmental issues, which includes greenhouse gas emissions and impact on natural resources, its engagement with and impact on society – both local and global, and the strength of its governance and the ethics behind its decision and policy making.
Companies around the world are being pressed to provide more transparency around their ESG risks and meaningful progress toward the mitigation of those risks.
ESG matters for a number of reasons, not least because the criteria are a set of standards that potential investors use to screen and evaluate companies. When a company’s ESG “score” (a measure of a company's exposure to long-term environmental, social, and governance risks) goes up, its capital costs are reduced, and the company valuation improves. It is like a sustainability credit rating.
A good sustainability program drives business growth and enhances the brand, while cutting costs and reducing risk.
The most important reasons for focusing on ESG, however, are the long-term impacts on society and the planet.