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It’s Time to Make a Strong Commitment to E.S.G.

It’s Time to Make a Strong Commitment to E.S.G.

July 18, 2017

You might not have heard of the acronym, “E.S.G.,” but if you’re planning to seek funding anytime soon, listen up: E.S.G. is now a key metric for investors in making major investment decisions.

But what is E.S.G.? Investopedia provides a simple explanation, saying, “The Environmental, Social and Governance (ESG) Criteria is a set of standards for a company’s operations that socially conscious investors use to screen investments.” Here’s how they break it down:

  • Environmental criteria looks at how a company performs as a steward of the natural environment.
  • Social criteria examines how a company manages relationships with its employees, suppliers, customers and the communities where it operates.
  • Governance deals with a company’s leadership, executive pay, audits and internal controls, and shareholder rights. Investors who want to purchase securities that have been screened for ESG criteria can do so through socially responsible mutual funds and exchange-traded funds.

A recent New York Times article highlighted investors’ growing focus on E.S.G. The article says, “Big investors, like pension funds and others, have publicly declared that they now consider environmental, social and governance issues to be key metrics of their investment decisions. To pass muster, companies seeking their favor must show a proven track record of responsible stewardship in all three categories.”

Later in the article, the columnist, Andrew Ross Sorkin, points out the intricacies of addressing E.S.G. Sorkin says, “The phrase ‘environmental, social and governance’ attempts to encompass a lot. It involves trying to measure a company’s environmental impact — that is, what it is doing about the environment and climate change — as well as its record on social issues and corporate citizenship. On the governance front, measurements include factors like whether shareholders are given a say on pay.”

Retailers and brand owners need to remain strongly devoted to E.S.G. in order for investors to put a stake in your business. By enabling your business to properly manage these complexities, NGC’s Andromeda Vendor Compliance can help your company oversee its commitment to E.S.G. and provide complete supply chain transparency.

To learn more, download our white paper, “Managing Your Global Vendors - The Three Pillars of Success.”