FAQs

What does ESG stand for?

ESG stands for Environmental, Social and Governance.

Why is ESG a hot topic right now?

Investors and policy makers have made ESG a top priority for action. Consumers, to a large extent driven by millennials, are making financial, purchasing and employment decisions based on ESG attributes of products and companies. As alluded to above, individual investors also want to put money into companies that do “social good,” and asset managers are claiming that they have funds that do that, but there is no accepted way to measure those claims. Regulation of investors in this area is coming and will spur demands from investors that companies provide more accurate and comprehensive information.

Even outside of the “shareholder demand” framework, companies themselves are finding new opportunities and advantages in ESG initiatives – cost savings, consumer opportunities. Companies are also confronting ESG risks – stranded carbon-producing assets, fire-related bankruptcies, new risks for buildings that are located in areas affected by climate change. There is an ongoing debate about whether the “purpose of the corporation” is to benefit shareholders versus society at large, and that is playing into greater demand for ESG transparency, including media coverage and legislative hearings. Climate change impacts have become more obvious and painful, global supply chains have highlighted human rights violations and environmental degradation. Social media is a conduit through which these issues are amplified and communicated around the world instantly. There is a lot of risk and a lot of opportunity.

ESG is not new – but it has evolved over the course of many decades from a pure compliance, “check-the-box” matter into a topic that stakeholders expect to be expressly integrated into corporate strategy. 

The ESG space has recently seen unprecedented change globally. It is estimated that between 300 and 600 individual ESG investment rating/evaluation models exist. Hundreds of billions of dollars are flowing into ESG-tagged investments. In the first few months of the Biden administration, regulatory initiatives across multiple agencies have moved at light speed. The plethora of ESG/sustainability reporting frameworks have recognized the current market fragmentation and agreed to various forms of consolidation and collaboration, but the idea of a global reporting standard remains far off, and isn’t universally supported.

These massive and rapid developments, while positive and arguably overdue, are creating massive confusion and anxiety for corporate boards, executives and management. Moreover, ESG is a multidisciplinary matter, meaning many companies and their advisors spread functional capabilities across departments that may not otherwise communicate or work together. In summary:

• ESG management and reporting is moving from voluntary to mandated
• The environment is changing very rapidly from multiple angles
• ESG responsibilities are spread across multiple corporate departments, each having a combination of both unique and shared information needs
• Currently, information on ESG is overly specialized (e.g., academic or investment studies), technical (e.g., data management) or not practical (e.g., sales pitches or too generalized)
• Companies and their advisors need trusted, practical guidance about concrete steps they need to take to address ESG risks & opportunities

Specialist advisors are expensive, incentivized by billable hour goals and tend to have perspectives limited to a particular function (legal, HR, IT, etc.).

PracticalESG.com is a trusted source of ESG guidance and updates, curated by experienced and recognized practitioners who emphasize practicality, usability and appropriateness of information.

Who would benefit from a PracticalESG.com membership?

• In-house and external lawyers and advisors involved in securities, governance, compliance, environmental, supply chain, M&A and international trade issues, human rights, diversity/equity/inclusion, human resources and employment; ESG/sustainability/CSR practitioners; 
• Auditors
• Operations
• Finance
• Strategic planning and procurement staff
• Marketing/communications 
• Investor relations
• And more…