ESG, which stands for Environmental, Social, and Governance, originated from Socially Responsible Investment (SRI) and aims to evaluate company value from the perspectives of environmental, social, and governance aspects. The ESG concept and evaluation system include the following main factors:
E- Environment
Examining a company's performance in environmental protection, natural resource utilization, and pollution management.
S- Social
Assessing whether a company practices social responsibility in its operations.
G- Corporate Governance
Evaluating a company's performance in risk management, legal operation, and other aspects.
ESG ratings and standards are rapidly expanding and diversifying, according to a report by the World Business Council for Sustainable Development (WBCSD). Currently, there are over 600 ratings and standards worldwide, with more than 2,000 individual ESG reporting indicators.
This proliferation reflects the growing importance of environmental, social, and governance factors in business decision-making. ESG ratings and standards provide a framework for companies to assess and communicate their sustainability performance, helping investors and stakeholders make informed decisions. As the ESG landscape continues to evolve, it is crucial for companies to stay updated on the latest standards and integrate ESG considerations into their strategies.
Consultation message
Our recommendation is that investment parties or stakeholders have different focuses and approaches, some of which focus on management and strategy, while others focus on performance and indicators. Companies do not need to participate in every standard and rating, but should prioritize the standards and ratings that are most useful to both parties, such as:
1. Transparency in process methodology, allowing us and our stakeholders to understand and appreciate the results;
2. Relying primarily on public information to ensure an equal evaluation of us on the same basis;
3. Avoiding unnecessary workload, allowing us to focus our energy on engagement and performance improvement;
4. Achieving greater comparability, usually through comparison with peers in our industry;
5. Providing sufficient feedback loops to enable continuous improvement and provide input on future development.
