Difference between revisions of "ESG Factors"
Wiki admin (talk | contribs) |
Wiki admin (talk | contribs) |
||
| Line 4: | Line 4: | ||
ESG factors can lead to negative financial impacts through a variety of [[Risk Factor | risk drivers]]. The causal chains that explain how these risk drivers impact institutions through their counterparties and invested assets are called [[Risk Transmission Channel | ''transmission channels'']]. | ESG factors can lead to negative financial impacts through a variety of [[Risk Factor | risk drivers]]. The causal chains that explain how these risk drivers impact institutions through their counterparties and invested assets are called [[Risk Transmission Channel | ''transmission channels'']]. | ||
| − | + | == Environmental Factors == | |
| − | Environmental factors are related to the quality and functioning of the natural environment and of natural systems, and include factors such as climate change, biodiversity, energy consumption, pollution and waste management. They can be defined as environmental matters that may have a positive or negative impact on the financial performance or solvency of an entity, sovereign or individual. Environmental considerations may include: | + | Environmental factors are related to the quality and functioning of the natural environment and of natural systems, and include factors such as climate change, biodiversity, energy consumption, pollution and waste management. They can be defined as environmental matters that may have a positive or negative impact on the financial performance or solvency of an entity, sovereign or individual. Environmental factors can give rise to negative financial impacts through a variety of risk drivers that can be categorised as physical risks and transition risks. Environmental considerations may include: |
| + | |||
| + | === Emissions === | ||
| + | |||
| + | === Energy Efficiency === | ||
| + | |||
| + | === Water Usage === | ||
| + | |||
| + | === Waste Production === | ||
| + | |||
| + | === Biodiversity and Ecosystems === | ||
| + | |||
| + | === Environmental Hazards === | ||
* [[Climate Change]] | * [[Climate Change]] | ||
| Line 14: | Line 26: | ||
* [[Biodiversity Loss]] | * [[Biodiversity Loss]] | ||
| − | |||
| − | + | == Social Factors == | |
Social factors are related to the rights, well-being and interests of people and communities, and include factors such as (in)equality, health, inclusiveness, labour relations, workplace health and safety, human capital and communities. These factors are increasingly being considered in the business strategies and operating frameworks of institutions and their counterparties. | Social factors are related to the rights, well-being and interests of people and communities, and include factors such as (in)equality, health, inclusiveness, labour relations, workplace health and safety, human capital and communities. These factors are increasingly being considered in the business strategies and operating frameworks of institutions and their counterparties. | ||
Social factors can be defined as social matters that may have a positive or negative impact on the financial performance or solvency of an entity, sovereign or individual. Considerations may include issues such as: | Social factors can be defined as social matters that may have a positive or negative impact on the financial performance or solvency of an entity, sovereign or individual. Considerations may include issues such as: | ||
| + | |||
| + | === Community and Society === | ||
| + | |||
| + | === Emplyee Relationships and Labour Standards === | ||
| + | |||
| + | === Customer Relationships === | ||
| + | |||
| + | === Human Rights === | ||
| + | |||
| + | === Povery and Famine === | ||
| + | |||
* [[Inequality]] | * [[Inequality]] | ||
* Inclusiveness | * Inclusiveness | ||
| Line 30: | Line 52: | ||
* Employee Relations | * Employee Relations | ||
| − | + | == Governance Factors == | |
Governance factors cover governance practices, including executive leadership, executive pay, audits, internal controls, tax avoidance, board independence, shareholder rights , corruption and bribery, and also the way in which companies or entities include environmental and social factors in their policies and procedures. Governance factors can be defined as governance matters that may have a positive or negative impact on the financial performance or solvency of an entity, sovereign or individual. | Governance factors cover governance practices, including executive leadership, executive pay, audits, internal controls, tax avoidance, board independence, shareholder rights , corruption and bribery, and also the way in which companies or entities include environmental and social factors in their policies and procedures. Governance factors can be defined as governance matters that may have a positive or negative impact on the financial performance or solvency of an entity, sovereign or individual. | ||
Conciderations around the governance of public and private institutions with relevance to ESG factors (have an impact on or are impacted by institutions’ counterparties or invested assets, including governance arrangements for the environmental and social factors in counterparty policies and procedures) include: | Conciderations around the governance of public and private institutions with relevance to ESG factors (have an impact on or are impacted by institutions’ counterparties or invested assets, including governance arrangements for the environmental and social factors in counterparty policies and procedures) include: | ||
| + | |||
| + | === Ethical Considerations === | ||
| + | |||
| + | === Strategy and Risk Management ==== | ||
| + | |||
| + | === Inclusiveness === | ||
| + | |||
| + | === Transparency === | ||
| + | |||
* management structures | * management structures | ||
* employee relations and | * employee relations and | ||
Revision as of 07:45, 13 August 2021
Contents
Definition
ESG Factors are environmental, social or governance conditions that are subject to uncertainty and that may have a positive or negative impact on the financial performance or solvency of an entity, sovereign or individual.[1]
ESG factors can lead to negative financial impacts through a variety of risk drivers. The causal chains that explain how these risk drivers impact institutions through their counterparties and invested assets are called transmission channels.
Environmental Factors
Environmental factors are related to the quality and functioning of the natural environment and of natural systems, and include factors such as climate change, biodiversity, energy consumption, pollution and waste management. They can be defined as environmental matters that may have a positive or negative impact on the financial performance or solvency of an entity, sovereign or individual. Environmental factors can give rise to negative financial impacts through a variety of risk drivers that can be categorised as physical risks and transition risks. Environmental considerations may include:
Emissions
Energy Efficiency
Water Usage
Waste Production
Biodiversity and Ecosystems
Environmental Hazards
- Climate Change
- Greenhouse Gas Emissions
- Resource Depletion
- Waste and Pollution
- Deforestation
- Biodiversity Loss
Social Factors
Social factors are related to the rights, well-being and interests of people and communities, and include factors such as (in)equality, health, inclusiveness, labour relations, workplace health and safety, human capital and communities. These factors are increasingly being considered in the business strategies and operating frameworks of institutions and their counterparties.
Social factors can be defined as social matters that may have a positive or negative impact on the financial performance or solvency of an entity, sovereign or individual. Considerations may include issues such as:
Community and Society
Emplyee Relationships and Labour Standards
Customer Relationships
Human Rights
Povery and Famine
- Inequality
- Inclusiveness
- Labour Relations
- investment in human capital and communities
- Human Rights
- Modern Slavery
- Child Labour
- Working Conditions
- Employee Relations
Governance Factors
Governance factors cover governance practices, including executive leadership, executive pay, audits, internal controls, tax avoidance, board independence, shareholder rights , corruption and bribery, and also the way in which companies or entities include environmental and social factors in their policies and procedures. Governance factors can be defined as governance matters that may have a positive or negative impact on the financial performance or solvency of an entity, sovereign or individual.
Conciderations around the governance of public and private institutions with relevance to ESG factors (have an impact on or are impacted by institutions’ counterparties or invested assets, including governance arrangements for the environmental and social factors in counterparty policies and procedures) include:
Ethical Considerations
Strategy and Risk Management =
Inclusiveness
Transparency
- management structures
- employee relations and
- executive remuneration
- bribery and corruption
- board diversity and structure
- political lobbying and donations
- tax strategy
See Also
References
- ↑ EBA Report: On Management and Supervision of ESG Risks for Credit Instituions and Investment Firms, EBA/REP/2021/18
