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ESG Basics

ESG can seem complex and overwhelming, but we’re here to walk you through it. Learn the basics of ESG to build a strong foundation for your journey.

The Importance of ESG

ESG is a set of environmental, social, and governance factors that companies should account for when operating their business and setting strategy. ESG integration allows a company to manage risk and create value over the long term. It also offers a framework by which companies can be evaluated by their employees, customers, investors, and the public at large. Private markets can leverage ESG considerations to make better investment decisions by mitigating risk and enhancing long-term, sustainable value creation.

Environmental

How a company manages the impact that its business practices have on the environment and natural resources.
Example Criteria
  • carbon emissions
  • biodiversity
  • waste management
  • deforestation
  • water usage

Social

How a company manages its relationships with certain stakeholders, including employees, customers, and local communities in which it operates.
Example Criteria
  • community relations
  • DEI
  • product safety
  • human rights
  • employee safety

Governance

The corporate governance structures that a company has in place to make decisions, conduct business, and hold itself accountable.
Example Criteria
  • Board Diversity
  • Compliance
  • Anti-corruption
  • Executive Pay
  • Business Ethics

Explore Novata’s Metric Library guide to understand key ESG reporting topics.

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See widely adopted
ESG frameworks and standards.

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