ESG criteria: What they are and why they are important - The Solihull Observer

ESG criteria: What they are and why they are important

Solihull Editorial 13th Apr, 2023   0

ESG criteria describe a company according to non-financial parameters, enhancing its social and environmental impact.

A company is not only of managers and shareholders but is part of a community and a territory.

Being sustainable is an investment that creates a virtuous circle between economic growth and doing good for people and the planet.

Sustainable is a model of economic growth which, with a long-term perspective, reconciles the interests of current generations with the interests of future ones and which considers three dimensions to be interdependent: economic, environmental and social.

A company belongs not only to managers and shareholders but is a good for everyone; it is part of a social and territorial context with which it interacts: corporate social responsibility derives from it.

Sustainability therefore becomes a strategic component and a guideline in corporate practices to generate collective well-being and reduce the impact on the planet.

Consequently, the assessment of a company must take into account both economic and social and environmental performance: this is what the ESG criteria and related indicators (ESG score and rating) are for.

The meaning of the acronym “ESG”

ESG criteria (environmental, social and governance) are criteria for assessing a company’s commitment according to three dimensions – environmental, social and governance – which measure how sustainable and responsible it is.

ESG principles are extra-financial parameters that are added to the “classic” economic parameters, thus increasing the information available to formulate an opinion on the company.

For investors, the ESG criteria – or rather the ESG scores and ratings – also serve to evaluate their solidity in terms of investment.

In fact, we speak of sustainable finance when, in addition to economic objectives, environmental and social ones are also taken into consideration.

A sustainable and responsible company is therefore attentive to the environmental factor if it reduces greenhouse gas emissions; it is efficient in the use of energy and natural resources (water, raw materials, forests…); does not pollute; protect biodiversity etc.

The value given to the social factor takes the form, for example, in the quality of the work environment and the supply chain; in the development of human resources; in the attention to gender equality, diversity and inclusion; in taking charge of corporate social responsibility in the broadest sense.

The third ESG factor – corporate governance – concerns ethics and transparency; control policies and procedures; in the case of joint-stock companies, the rights of the shareholders, the composition, independence and remuneration of the board of directors, etc.

ESG principles: our commitment

We summarize all of our ESG efforts in the term “corporate citizenship”.

Corporate citizenship means feeling part of a community and a territory, with the awareness of being responsible for the collective well-being and for what concerns environmental issues.

P&G plants are present in almost 40 countries, our corporate citizenship therefore affects a variety of communities and territories and is put into practice every day in the way we work: for sustainable development.

P&G’s history demonstrates that corporate growth has been and is linked in a virtuous circle to its ability to do good.

We are committed to environmental sustainability so that our impact on the planet is positive: by innovating products, promoting responsible consumption, reducing emissions, opting for an increasingly sustainable supply chain and establishing strategic partnerships.

We face all the major environmental problems in search of concrete solutions to make our contribution: emissions, forests, water, plastic packaging.

A summary of the results and the steps to be taken to achieve net zero GHG emissions by 2040 can be found in our climate transition plan.

Corporate citizenship is also social responsibility, which on the one hand means promoting and living the values of equality and inclusion inside and outside the company, and on the other generating an impact on communities by promoting cultural changes.

In fact, greater opportunities and equality – also through gender equality and multiculturalism in the company, representation at board level – means growth, not only for people, but also for communities and the economy.

Governance is the basis of our work and of our corporate citizenship.

The strength of our environmental sustainability and social responsibility depends on the strength of the ethical, compliance and quality standards we have set for ourselves, but also on having firm roots in the purpose, values and principles of our company, the tenets that guide us to do the right thing.


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