What is ESG?

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ESG – Environmental Social and Governance.


ESG is short for Environmental, Social and Governance. 
This is also called sustainability in many cases. In a corporate context sustainability is about the company’s business model, i.e. how the company’s products and services are contributing to sustainable development. As well as its risk management, i.e. how the company manage its own operations so it minimize its negative impact on its surroundings. 

Below you can see an example on how ESG can work in practice. This film shows how a financial actor works with ESG as part of its wealth management. It will as well  give you a good understanding of the term ESG and why it is an important factor in business decisions.

Environmental

Global production and consumption has a major impact on our environment. When producing and consuming everything from cars to food we contribute to climate change, resource depletion, waste, pollution, deforestation and bio-diversity as a few examples. 

Below you can see an example on how factories producing medicine can severely pollute the environment as well as how financial actors can address problems like this. 

Social

Companies has a responsibility for its employees as well as its impacton the societies where they operate. As example this regards working conditions, worker’s rights,  anddiversity.

Below you can see an example from a clothing manufacturer  and how companies can address working conditions, health and safety in factories.  

Governance

Governance issues can be control mechanisms against bribery and corruption, tax, executive remuneration, shareholders possibility to vote and internal control. We believe active corporate governance is important for the development of companies and long-term beneficial for shareholders, employees and society. 

One of the ways to ensure this is to focus on increasing transparency and openness in contacts between the company and shareholders on issues such as board composition and shareholder rights.

To see how we have voted in different Annual General Meetings, please visit our Voting Portal