ESG Criteria

From Open Risk Manual

Definition

ESG Criteria denotes a broad set of factors (criteria) measuring the Sustainability and ethical impact of an investment in a company or business. There is no universally identified and agreed set of such factors. A common reference is[1]

Components

Environmental Criteria

Environmental considerations may include:

  • climate change
  • greenhouse gas emissions
  • resource depletion
  • waste and pollution
  • deforestation
  • biodiversity loss

Social Criteria

Considerations may include issues such as

  • inequality
  • inclusiveness
  • labour relations
  • investment in human capital and communities
  • human rights
  • modern slavery
  • child labour
  • working conditions
  • employee relations

Governance Criteria

Concenrn the governance of public and private institutions, including

  • management structures
  • employee relations and
  • executive remuneration
  • bribery and corruption
  • board diversity and structure
  • political lobbying and donations
  • tax strategy

See Also

Issues and Challenges

  • The criteria cover a very wide and open ended domain which can complicate assessment, especially in a single ESG Rating

References

  1. UNPRI, "What is responsible investment", 2019

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