ESG Fundamentals

Environmental, Social, and Governance (ESG) refers to the three central factors in measuring the sustainability and societal impact of an investment in a company or business.

The Three Pillars

Environmental (E) — Climate change, resource depletion, waste, pollution, deforestation
Social (S) — Working conditions, local communities, diversity & inclusion, human rights
Governance (G) — Board composition, audit practices, executive pay, shareholder rights, anti-corruption

Why ESG Matters

Risk Management — ESG factors represent material financial risks
Investor Demand — $35 trillion in global ESG assets (2024)
Regulatory Requirements — Mandatory ESG disclosure in major markets
Stakeholder Expectations — Customers, employees, communities demand sustainability

ESG vs CSR vs Sustainability

ESG — Measurable factors for investment analysis
CSR (Corporate Social Responsibility) — Voluntary initiatives beyond legal requirements
Sustainability — Broader concept of long-term environmental and social viability

Getting Started with ESG

1. Understand materiality — Identify ESG issues relevant to your industry
2. Choose a framework — Select reporting standards (GRI, SASB, IFRS)
3. Collect data — Establish systems for ESG data collection
4. Set targets — Define measurable ESG goals
5. Report transparently — Disclose progress and challenges

From ESG Library

• ESG Reporting Made Simple (IFRS/SASB) — Comprehensive introduction to ESG reporting
• ESG & GRI Reporting Made Simple — GRI Standards implementation guide

View all books →

Key Resources

• CFA Institute ESG Investing
• PRI What is Responsible Investment?
• World Economic Forum ESG Resources

Part of ESG Hub | Curated by Ascent Partners Foundation