An acronym first used by the investment community that has since become mainstream, ESG stands for environmental, social and governance. Defined as a set of standards for company operations, ESG represents risks and opportunities that will impact a company’s ability to create long-term value.
Some of those key risks and opportunities include climate change and resource scarcity; diversity, equity and inclusion (DEI); safety issues and data security; and board diversity, executive pay and tax transparency, according to PwC. Of increasing importance to companies, their shareholders and other stakeholders, ESG helps those entities measure a company’s value outside of its current financial position by taking into consideration the factors listed above.
