Business impact and is impacted by the environmental, social and governance issues. The ESG – acronym for Environmental, Social and Governance has steadily gained significance in the last decade as an indicator of a corporate’s growth performance, outlook, risk taking ability, profitability and sustainability.

Decoding ESG

Simply put, the ESG criteria of a corporate is:

Environmental – The natural resources consumed by a corporate, the effluents or waste it discharges and the consequent impact on the society. 

Key indicators: (including but not limited to below)

• Consumption of water and power
• Discharge of waste / effluents 
• Air / water pollution 
• Carbon emission / carbon footprint 
• Waste management 
• De-forestation  
• Climate change
• Re-cycling, use of recycled products in the course of work
• Conservation of energy initiatives  

Social – relationship that the company maintains with people – employees, labour, vendors, other corporates, institutions and everyone it does business with. 

Key indicators: (including but not limited to below)

• Employee relations 
• Gender equality, diversity and inclusion 
• Safety at workplace especially for women
• Grievance redressal, especially committee for sexual harassment  
• Health, medical and safety measures at workplace 
• Child labour
• Employment opportunities 
• Customer care 

Governance – the internal policies and practices framed by the management of the company in running the company, statutory compliance policy.  

Key indicators: (including but not limited to below)

• Composition of Board – diversity including women members 
• Pay structure of the Board 
• Political contribution if any
• Indulgence in corruption including bribery.
• Statutory compliance 

ESG basically indicates the profitability, value creation and sustainability of a business which has no or minimal negative impact on the environment or society.