ESG (Environmental, Social, and Governance)

ESG stands for Environmental, Social, and Governance — the three categories used to evaluate a company’s sustainability performance, risks, and opportunities. Environmental criteria cover climate change, GHG emissions, pollution, water use, biodiversity, and circular economy. Social criteria cover human rights, labour practices, community relations, diversity, health and safety, and supply chain working conditions. Governance criteria cover corporate governance structures, anti-corruption, executive pay, board composition, and business ethics. ESG has no single universal regulatory definition but is operationalised through frameworks including CSRD/ESRS (EU), IFRS S1/S2 (global), GRI Standards, and SEC climate disclosure rules (US).

No single official regulatory definition. Operationalised through: CSRD (EU) 2022/2464; ESRS Set 1 (EU) 2023/2772; IFRS S1 and S2 (ISSB, June 2023); GRI Standards 2021; UN SDGs.

For manufacturers, ESG encompasses the full range of sustainability obligations: GHG measurement and reduction (E), supply chain human rights and labour standards (S), and governance of sustainability risk (G). ESG reporting obligations are now legally mandated for large companies (CSRD/ESRS in EU; state laws in California) and increasingly demanded by investors, customers, banks, and public tenders. Building an integrated ESG data management system is essential for efficient multi-framework reporting.