The Environment, Social, and Governance (ESG) principles were first seen in the 1960s when ‘socially responsible investing’ was initiated for people who were against the Vietnam war and didn’t want to invest in companies that produced weapons.
Today, ESG has become an intrinsic element of investment decision-making. This is because ESG factors are directly linked with the sustainability of the organization. An ESG report helps convey that the company is operating in accordance with the Corporate Governance guidelines (formed by the National Foundation for Corporate Governance) and showcases the steps it has undertaken to preserve the environment.
This section of the report accounts for the company’s relationship with all its stakeholders, other organizations it gets into business with, and largely the community within which it operates.
The Governance section of the report looks at the internal policies and procedures that the company has in place to ensure ethical workings, effective decision-making, legal compliances, and external obligations.
While the above pointers cover the broad list of topics that can be included under the main headings, below is a more comprehensive list of everything that the company can report on under each section.
While an ESG report does not have a specified format, you should ensure that it covers all three elements transparently in its report.
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