G
Governance (ESG)
Definition
Governance in ESG refers to the internal systems, practices, and processes by which a company is directed and controlled, including: board composition, diversity, and independence; executive compensation and sustainability linkage; audit and risk management frameworks; anti-corruption and anti-bribery policies; transparency and disclosure; whistleblower protections; and political engagement. ESRS G1 (Business Conduct) under the CSRD covers: corporate culture, protection of whistleblowers, animal welfare, political engagement, management of relationships with suppliers, and corruption/bribery. IFRS S1 requires governance disclosures of sustainability-related financial information.
Source
ESRS G1 (Business Conduct), Commission Delegated Regulation (EU) 2023/2772; IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information (ISSB, June 2023); UN Convention Against Corruption (UNCAC).
Practical Explanation (Compliance Context)
Governance disclosures are mandatory under ESRS G1 for CSRD-scoped companies and form the basis of investor confidence in ESG data quality. Key G disclosure requirements include: board-level oversight of sustainability; incentive structures linking remuneration to sustainability KPIs; anti-corruption policies and training; and supplier code of conduct programmes. Strong governance disclosures signal credible sustainability commitments and reduce investor risk perceptions.