List of ESG Factors
Contents
List of ESG Factors
This is a list of ESG Factors as currently considered to capture most material Environmental Social and Corporate Governance criteria[1]. The list is structured in ESG groups / sub-groups / individual factors. For each factor there is an indication as to how it can be assessed / measured.
| Factor | Measurement | Remarks |
|---|---|---|
| colspan="3" Environmental Factors | ||
Environmental Factors
Environmental factors can be defined broadly as environmental conditions that may have a positive or negative impact on the financial performance or solvency of an entity, sovereign or individual. Environmental factors are related to the quality and functioning of the natural environment and of natural systems, and include factors such as
- Climate Change
- Resource Depletion
- Energy Consumption
- Waste and Pollution
- Deforestation
- Biodiversity Loss
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
- Greenhouse Gas Emissions, Total GHG emissions (broken down by scope 1, 2 and 3 carbon emissions)
- Emissions of air pollutants
- Emissions of water pollutants
- Emissions of inorganic pollutants
- Carbon footprint
- Fossil fuel sectors
- Reduction policies or initiatives on the use and production of fossil fuels
- Compliance with Paris Agreement targets
- Reduction policies or initiatives on emissions
Energy Efficiency
- Energy consumption intensity
- Use of renewable sources of energy
Water Usage
- Water consumption intensity
Waste Production
- Production of hazardous waste
- Reusability/Recyclability
Biodiversity and Ecosystems
- Presence/operations (e.g. own, via value chain) in geographic areas impacted by soil degradation
- Presence/operations (e.g. own, via value chain) in geographic areas and industries that are particularly dependent on biodiversity and ecosystem services
- Presence/operations (e.g. own, via value chain) in protected areas or areas of high biodiversity value outside protected areas
- Operations (e.g. own, via value chain) affecting IUCN Red List species and/or national conservation list species
Environmental Hazards
- Presence/operations (e.g. own, via value chain) in areas likely to be affected by heatwaves
- Presence/operations (e.g. own, via value chain) in areas likely to be affected by water scarcity
- Presence/operations (e.g. own, via value chain) in areas likely to be affected by floods
- Presence/operations (e.g. own, via value chain) in areas likely to be affected by coastal erosion
- Presence/operations (e.g. own, via value chain) in areas likely to be affected by wildfires
Social Factors
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. Social factors are related to the rights, well-being and interests of people and communities, and include factors such as:
- Inequality
- Inclusiveness
- Labour Relations
- Employee Relations
- Working Conditions
- Health and Safety
- Modern Slavery
- Child Labour
- investment in human capital and communities
- Human Rights
These factors are increasingly being considered in the business strategies and operating frameworks of institutions and their counterparties.
Community and Society
- Relations with local communities (networks)
- Social impact of products and services
Employee Relationships and Labour Standards
- Freedom of association and right to organise
- Forced labour
- Minimum age and child labour
- Equal representation
- Equal remuneration
- Discrimination
- Human capital management and employee relations (training and development opportunities)
- Workplace health and safety
Customer Relationships
- Customer protection and product responsibility
- Personal data security and privacy
- Rights of customers to obtain information about ESG factors
- Quality and innovation in customer relations
Human Rights
- Contribution to human rights projects
Povery and Famine
- Contribution to poverty reduction
Governance Factors
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 elements such as:
- management structures / executive leadership
- executive remuneration
- board diversity and structure / independence
- audits and internal controls
- shareholder rights
- bribery and corruption
- political lobbying and donations
- tax strategy / tax avoidance
- inclusion of environmental and social factors in policies and procedures
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
- Integrity of conduct/conduct frameworks
- Values and ethics
- Bribery and corruption
- Accountability/rule of law
Strategy and Risk Management
- Strategy implementation, operational execution and monitoring
- Internal controls and risk management policies and procedures
Inclusiveness
- Discrimination
Transparency
- Observance of disclosures, information rules and practices
See Also
References
- ↑ EBA Report: On Management and Supervision of ESG Risks for Credit Instituions and Investment Firms, EBA/REP/2021/18
