ESG is used to measure how a company is performing in relation to a series of social-impact minded criteria. The whole concept underpins a shift in how businesses are valued and evaluated, because business activities are now measured not only for their financial viability, but for their adherence to ESG principles.
This framework reminds corporations, businesses and leaders that they do not operate as an insular entity but as part of a wider society to which they owe a responsibility.
Although the concept of ESG might seem abstract, its most material form is apparent when company’s disclose their environmental, social and governance data. This data will showcase their commitment to ESG principles, how they have implemented ESG friendly practices, and how they are performing. This is called ‘ESG reporting’.