What is the ESG Movement?
When you hear about ESG, do you ask yourself, “what does ESG mean?” Where did it come from, and will it last? Is anyone really paying attention? Do businesses really care about ESG?
ESG stands for environmental, social, governance, and it is one approach to sustainability. The ESG movement may be considered an ESG revolution by some people. What do you need to know and what does it mean for vegans? Let’s find out!
What is ESG?
Authors of an article published by the Harvard Law School Forum on Corporate Governance explains that ESG arose out of “investment philosophies clustered around sustainability,” It later included socially responsible investing. There is no one list of examples or goals, yet the ESG revolution is at the forefront of conversations in spite of the lack of standardization.
Let’s look at the ESG categories.
The “E” covers carbon footprints, greenhouse gas emissions, climate change and pollution mitigation, along with biodiversity, energy efficiency, waste management, and water usage.
The “S” includes human rights, labor standards, racial diversity, community relations, health and safety, supply chain management, pay equity, and other issues that are related to human capital and to social justice.
The “G” governs the other two categories. The Harvard article indicates that the “G” category also includes corporate board composition and its structure, executive compensation, “strategic sustainability oversight and compliance,” political contributions, bribery, corruption.
There is a rapidly evolving ESG regulatory landscape regarding disclosure. Companies realize that they cannot survive in a failing society. The majority of companies now realize that societal impact must be a part of the company’s business strategy.
The ESG Movement and ESG Revolution
A group of CEOs discussed ESG in 2010, while urging businesses to take a longer-term view. ESG covers a variety of activities that may or may not have relevance to particular companies and their performance. The Business Council for International Understanding (BCIU) points out that ESG practices are more than just smart business. They are a crucial part of the long-term success of a company.
CEOs and CSOs often recognize that there is a lack of global standards for ESG evaluation. Some companies have tried to come to an agreement regarding ESG disclosures.
Socially conscious consumers vote with their wallet, a factor that companies and businesses are starting to realize when considering their societal impact. Companies are increasingly expected to take a stand on societal issues and to provide disclosures on their decisions and actions that impact the well-being of people.
Investors and corporate stakeholders expect companies to make changes where necessary to comply with ESG categories. S&P Global reported that nearly 60 percent of the companies in the S&P 500 Index had assets at high risk of at least one type of climate change physical risk.
Companies need to identify their goals and their objective targets and then work towards attaining them. Although some companies may not feel confident that they are able to become a part of the ESG movement towards sustainable goals, it is possible to achieve their realistic goals. Many companies have committed to reducing carbon emissions and taking other steps towards climate change.
Non-Financial Stock Factors Related to ESG
The ESG movement is so vital that companies across every sector are increasingly assessed on their non-financial ESG performance, explains the New Jersey Society of Certified Public Accountants (NJCPA). Businesses that provide sustainability disclosures increase their legitimacy in the eyes of their stakeholders.
Disclosing financial information is no longer enough to establish trust. Disclosing non-financial stock factors related to ESG is imperative for a company to show that it is both a socially and environmentally responsible company.
The green movement is not the same as the ESG movement. The site Measurabl calls the ESG movement a “radical departure” from the green movement. ESG takes a precise and measurable approach to better sustainability.
VEGN, the world’s first vegan-friendly and environmentally conscious Exchange Traded Fund (ETF) began trading on the New York Stock Exchange (NYSE) in 2019. It became unique because it was cruelty-free, unlike other ETFs.
ESG leads to the ability to acquire and interpret and to then apply ESG data. Companies can then apply the new information. Providing new disclosures likely leads to greater consistency and opportunities, and more trust from investors and other stakeholders. The green movement did not provide the information that we are able to gather and then implement as part of the ESG revolution.
How can I make a difference?
Remember that you do not have to own a company. Lifestyle choices make a huge difference to sustainability.
Why is there more emphasis on ESG compared to the going green movement?
The market acknowledged that there is no such thing as a “green” building or a “not green building.” Measurabl explains that ESG takes a measurable approach to sustainability.
What is the impact of vegans on transforming the global food market?
Several restaurants and fast-food companies now offer vegan options. The tremendous growth in organic produce and vegan food products will likely continue to grow,
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