Putting Responsible Practices Into Play

August 1, 2018     |     Darien Group

Environmental, Social, Governance — or ESG — is an increasingly common metric for assessing a company’s ethics. Broadly speaking, the E in ESG (Environmental) refers to the way a company interacts with and impacts its surrounding physical environment. The S (Social) considers the way a company manages relations across a wide range of demographics including employees, suppliers, customers and their broader communities. Lastly, the G (Governance) examines the role and character of a company’s leadership, taking into account things like executive pay, audits, internal controls, and shareholder rights.

“…it is increasingly obvious that monitoring and policies around sustainability and corporate responsibility are no longer viewed as optional for businesses but should instead be regarded as a necessity.”

Writing for CSQ, Darien Group Managing Partner Charlie Ittner explores rising attention toward ESG criteria and the ripple effect it has had on the corporate and investment worlds.

“Corporations face mounting pressures from ­institutional shareholders and the general public on ESG issues, such as corruption and environmental ­sustainability.”

Although ideological in origin, recent studies have consistently linked ESG practices with improved financial performance, proving that ethical, sustainable business models are in fact profitable. Accordingly, it is increasingly common for companies to disclose their ESG impact. In fact, ESG reporting rose 81% in 2015.To learn more about the value of ESG and the various approaches to adopting ESG standards read Charlie’s article here.

“When Environmental, Social, and Governance criteria are measured alongside financial analysis, the two methods of analysis can produce a clear picture of risk and return. This can prove to be beneficial to businesses, as ESG integration is often focused on identifying long-term risks and capturing opportunities arising from sustainability trends.”

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