What Does ESG Mean?
ESG stands for Environmental, Social, and Governance. It’s a set of criteria that investors, customers, and regulators use to gauge a company’s long-term sustainability beyond pure financial returns.
Environmental Criteria
- Greenhouse gas emissions (Scopes 1, 2 & 3)
- Energy use, efficiency, and renewables
- Waste, recycling, and pollution controls
- Water consumption and sustainable sourcing
Social Criteria
- Diversity, equity & inclusion metrics
- Labor standards & fair wages
- Health & safety programs
- Community engagement & human rights
Case Study: Patagonia
Patagonia allocates 1% of sales to environmental causes, rigorously vets its supply chain for labor rights, and publishes detailed traceability reports.
Governance Criteria
- Board independence & diversity
- Executive compensation tied to ESG goals
- Anti-corruption & ethical guidelines
- Transparency & shareholder rights
Key Frameworks & Metrics
GRI
Global Reporting Initiative standards
SASB
Sustainability Accounting Standards Board
TCFD
Task Force on Climate-related Financial Disclosures
PRI
UN Principles for Responsible Investment