Source : US SIF: The Forum for Sustainable and Responsible investment

“ What is ESG? ”

Under the support of the UN, institutional investors all over the world have formed a network called the UN Principles for Responsible Investment (UN PRI) to implement “ESG” —on the basis that business growth should occur in conjunction with consideration for three key factors, the environment, society, and governance, which are all interrelated and play a role in the growth of the business—in analyzing and making decisions regarding investments, as well as to encourage the business sector to disclose ESG data in a concrete way in order to assure stakeholders and investors that they are supporting companies that operate responsibly and are truly committed to sustainability.

“ESG” is the sustainability framework to drive the sustainable business’ growth.

Environmental management emphasizes the efficient use of resources and conservation of the natural environment affected by the company’s business operations
Social management refers to the fair and equitable management of human resources
Governance means establishing good corporate policies, operating with transparency

The three components of “ESG”

Environmental
Environmental management emphasizes the efficient use of resources and conservation of the natural environment affected by the company’s business operations.
Environmental factors in line with SDGs
Clean water and sanitation

which encompasses access to drinking water that is sufficient and up to standard for all

Affordable and clean energy

which people can access and purchase more easily in order to be ready for an electrically powered future

Responsible consumption and production

Responsible consumption and production by promoting efficient use of natural resources and adjusting production processes as well as consumer behavior to be consistent with the natural environment in order to create sustainable consumption

Climate action

Climate action to limit the increase of the global average temperature and expand the capacity to cope with the impacts of climate change

Life on land

Life on land with biodiversity, which requires sustainable resource management

Life below water

Life below water, which requires effective conservation of biodiversity and the marine ecosystem in order to create sustainability in the sea

Social
Social management refers to the fair and equitable management of human resources, including the occupational health and safety of the company’s employees all the way to consumers, communities, and workers throughout the supply chain, such as fair compensation, safe working conditions, workers’ health and well-being, diversity, equality, and anti-corruption measures, as well as the establishing of good relationships with surrounding communities through proactive support in the form of initiatives and activities.

Environmental factors in line with SDGs

No poverty

No poverty, especially among vulnerable populations, who must be provided access to basic resources and services as well as the means to cope with disasters and severe economic and social changes

Good health and well-being

Good health and well-being through a modern, accessible, and quality healthcare system, which is essential for the improvement of people’s quality of life and the country’s development

Quality education

Quality education which is comprehensive and equal for all in order to provide an opportunity for lifelong learning

Gender equality

Gender equality and expanded roles for all women and girls in order to promote respect for human rights

Reduced inequalities

Reduced inequalities to provide more opportunities for an equal life and improve the quality of life of target populations who need special assistance

Governance
Governance means establishing good corporate policies, operating with transparency, complying with regulations, fighting against corruption, and instituting operational procedures with management methods for various risks, as well as taking care of the interests of stakeholders.
Environmental factors in line with SDGs
Responsible Consumption and Production

Responsible consumption and production by promoting efficient use of natural resources and adjusting production processes as well as consumer behavior to be consistent with the natural environment in order to create sustainable consumption

Peace, Justice and Strong Institutions

Peace, justice, and strong institutions to promote a peaceful society

Partnerships for the Goals

Partnerships for the goals to be achieved in every country economically, socially, and environmentally

Nowadays, the “Sustainable Business Model” under the “ESG” framework is gaining widespread attention

from both listed companies and investors around the world who place importance on investing in companies with business practices that take into account the sustainability of the business and society as a whole. Companies’ performance in “ESG,” assessed based on these three indicators, are now used as a criterion in evaluating the sustainability, long-term competitiveness, and ability of a business to generate value for all stakeholders in order to inform investment decisions. This reflects the fact that investors wish to invest responsibly and are seeking returns not in the form of profit alone. Rather, they also would like to see more emphasis placed on the environment, society, and corporate governance.

Nowadays, the “Sustainable Business Model” under the “ESG” framework is gaining widespread attention from both listed companies and investors around the world who place importance on investing in companies with business practices that take into account the sustainability of the business and society as a whole. Companies’ performance in “ESG,” assessed based on these three indicators, are now used as a criterion in evaluating the sustainability, long-term competitiveness, and ability of a business to generate value for all stakeholders in order to inform investment decisions. This reflects the fact that investors wish to invest responsibly and are seeking returns not in the form of profit alone. Rather, they also would like to see more emphasis placed on the environment, society, and corporate governance.

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