What are the ESG criteria ?
A sustainable company needs to make socially responsible investments. This is one of the requests of theISR or socially responsible investment. However, it must also take into account its environmental footprint.
A gesture that is summarized by the criteria of the ESG. What are these analysis criteria ?
What does the abbreviation ESG represent ?
The term ESG designates an acronym used to define what means a sustainable investment. It designates environmental, social and good governance criteria. In general, these are the three pillars that make up the extra-financial analyzes carried out by a sustainable company.
These are also the components of socially responsible investment or theISR.
The ESG criteria are used in the assessment of the responsibility of a company with regard to its stakeholders and the environment. Sustainable finance and ESG criteria go hand in hand.
THE ESG criteria serve as a benchmark for companies in their environmental protection. They are also used as a reference in terms of professional ethics to follow. Investors wishing to invest in ESG funds will verify compliance with these three pillars:
The environmental criterion
The first criterion concerns The environmental. Among other things, it takes into account the mode of waste treatment (in terms of recycling). Initiatives for managing the greenhouse gas emission is also part of it.
Without forgetting the energy consumption which contributes considerably to the preservation of the resources of the planet.
The impact on the environment is examined by group of products. The result will depend on the measures to be taken to reduce their impact on the environment. For example, the impact of a detergent product is calculated once it is poured into the water. When a product manages to reduce this impact throughout its lifespan, it is rewarded.
It is then that he can be considered to be an ecolabel [an environmentally friendly product]. VS’This is that the environmental criteria to meet for a company are determined.
The social criterion
The second ESG criterion is of order social. It mainly concerns the world of work and the conditions under which all workers are without exception. The social criterion is used to study the management of the present dialogue within a company.
It avoids discrimination in all its forms on a professional level.
Evaluation of the Representation of men and women at work is also part of the ESG social criterion. The same goes for the analysis of the percentage of a disabled person or from a minority.
The governance criterion
The last criterion concerns the good governance. This concerns the transparency of the company’s accounts. Whether in terms of the presence of possible trace of corruption or in relation to the remuneration of managers.
CSR policy D’A company takes into account’A fair and equitable finance.
To show a good example, a sustainable company must show that its board of directors has total autonomy.
How to measure ESG criteria ?
THE reporting and the dedicated reports press releases by companies are the first means of measuring the ESG criteria. This is how it is possible to assess the management of their actions in terms of integration of ESG criteria. These documents describe how they put their socially responsible investment policy into practice. Investors will be keen to embark on the’Adventure of ISR funds.
There are institutions which have implemented performance indicators for concrete and speaking results. Indeed, compliance with ESG D criteria’A company can be verified by an extra -financial rating agency. In France, some associations have set up a ESG indicator grid.
Each point deals with Three ESG pillars. Among other things, the grid makes it possible to establish the share of women in supervisory positions and the number of hours of training per employee per year. The most frequent indicators are the volume of greenhouse gases in emission and the evolution of social workforce.
However, the task is quite complex for environmental criteria. Some companies even claim that the data to be harvested is so tiny that it is almost impossible to determine it. To overcome this, some decide to take up the information present in their reports.
To use them to determine the carbon footprint of one of their products for the whole of its life cycle.