ESG Fundamentals

ESG fundamentals provide the foundational knowledge needed to understand environmental, social, and governance issues in business — from core concepts and terminology to the business case for sustainability and the evolution of corporate responsibility.

Whether you are new to ESG or looking to strengthen your understanding of the basics, this section covers the essential concepts that underpin all ESG reporting, strategy, and investment.

Core Concepts

What is ESG? — Environmental, Social, and Governance (ESG) refers to the three central pillars used to evaluate a company's sustainability and ethical impact. Environmental factors cover climate change, resource use, pollution, and biodiversity. Social factors address labour practices, human rights, community impact, and product safety. Governance factors encompass board structure, executive compensation, business ethics, and transparency.

Materiality — The concept of materiality determines which ESG topics are significant enough to warrant disclosure and management attention. Financial materiality focuses on topics that affect enterprise value. Impact materiality considers the organisation's impacts on the economy, environment, and people. Double materiality combines both perspectives.

Stakeholder Theory — The recognition that businesses have responsibilities to a broader set of stakeholders beyond shareholders, including employees, customers, suppliers, communities, and the environment.

The Business Case for ESG — Research consistently demonstrates that strong ESG performance is associated with lower cost of capital, reduced risk, improved operational performance, enhanced reputation, and better long-term financial returns.

Key Resources

• ISSB Standards Navigator
• GRI Standards

Further Reading

• ESG Frameworks — Major reporting frameworks
• Standards Hub — Detailed framework guides
• Learning Hub — Courses and resources