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ESG

ESG - Environmental, Social and Governance criteria are a set of non-financial performance indicators that score how well a company has performed in these areas, often referred to as the 3 pillars:

EnvironmentalEnergy efficiency, emissions, climate change strategy, water efficiency, waste management etc

Social Health and safety, working conditions, gebder diversity, human rights, child labour, slavery, etc

GovernanceCorporate governance, board diversity and structure, executive compensation, political lobbying etc


What is ESG – a guide for businesses.
By the British Business Bank and ‚Äč‚Äčaimed at smaller businesses.

ESG

The History of ESG

“The story of ESG investing began in January 2004 when former UN Secretary General Kofi Annan wrote to over 50 CEOs of major financial institutions, inviting them to participate in a joint initiative under the auspices of the UN Global Compact and with the support of the International Finance Corporation (IFC) and the Swiss Government. The goal of the initiative was to find ways to integrate ESG into capital markets. A year later this initiative produced a report entitled “Who Cares Wins,” with Ivo Knoepfel as the author. The report made the case that embedding environmental, social and governance factors in capital markets makes good business sense and leads to more sustainable markets and better outcomes for societies. At the same time UNEP/Fi produced the so-called “Freshfield Report” which showed that ESG issues are relevant for financial valuation.”  

From: The Remarkable Rise of ESG by Georg Kell, Jul 11, 2018, Forbes

See also this useful history:  ESG – a brief history of its development. By Carbon View

Foroughi, Jaclyn. “ESG Is Not Impact Investing and Impact Investing Is Not ESG.” Stanford Social Innovation Review, 2022

ESG Ratings - Discussion

Financial Markets Standards Board: Spotlight Review  - ESG Ratings. The focus is on external ESG issuer rating methodologies for companies produced by third party commercial ESG rating providers.

BARC study: The state of ESG & Sustainability Reporting – Challenges, tools and outlook.

FR09/2021 Environmental, Social and Governance (ESG) Ratings and Data Products Providers. Nov. 2021 by the Board of the International Organization of Securities Commissios (IOSC.)

Dimson, E., Marsh, P., Staunton, M. (2020). Divergent ESG Ratings. The Journal of Portfolio Management, 47, Article 1. https://doi.org/10.3905/jpm.2020.1.175 

Hughes, A, M Urban, and D Wojcik. 2021. “Alternative ESG Ratings: How Technological Innovation Is Reshaping Sustainable Investment.” Sustainability 13 (6). 

Kotsantonis, Sakis, and George Serafeim. "Four Things No One Will Tell You About ESG Data." Journal of Applied Corporate Finance 31, no. 2 (Spring 2019): 50–58.  

Research Foundation Literature Reviews, 28 May 2020. ESG and Responsible Institutional Investing Around the World: A Critical Review. Pedro Matos. 

Szilárd Erhart, Take it with a pinch of salt—ESG rating of stocks and stock indices, International Review of Financial Analysis,
Volume 83, 2022, 102308, ISSN 1057-5219.

Edmans, A (2023) The End of ESG. Financial Management, 52 (1). pp. 3-17. ISSN 0046-3892.
Official URL: https://onlinelibrary-wiley-com.lbs.idm.oclc.org/d. DOI: https://doi.org/10.1111/fima.12413