ESG
Environmental, Social, and Governance
Definition
The three central pillars used to evaluate a company's or investment's sustainability and ethical impact. Environmental factors cover climate change, pollution, and resource use; social factors address labour practices, human rights, and community impact; governance covers board structure, executive pay, and shareholder rights. ESG integration is increasingly required in investment decision-making and risk management.
Regulatory Context
The EU has been the most active jurisdiction in ESG regulation through SFDR, the Taxonomy Regulation, and CSRD. The SEC has proposed climate disclosure rules, while the ISSB standards aim to create a global baseline for sustainability reporting. Anti-greenwashing enforcement is a growing priority.