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What is ESG?

The acronym ESG, known worldwide by its acronym in English ESG, responds to Environmental, Social and Corporate Governance criteria. In other words, a social investment will adopt a policy based on and with reference to these criteria.

Next, we try to define each of them more exactly:

Environmental criteria

They are the parameters that address the direct or indirect impact of the company on the environment. This criterion is applicable to any business, company or organization. For example, a law firm that consumes electricity, water and generates waste can improve and reduce its environmental impact. Environmental criteria are increasingly valued by organizations and end users, as they denote transparency, commitment and business quality.

Social criteria

These ESG criteria are those that respond to the relationship of the company with society as a whole. That is why the aspects of this parameter are very varied. Here are some social criteria that a company can follow:

  • Business to reconcile work and family
  • Gender equality measures
  • Employee training
  • Overtime reduction
  • Collaboration with educational and / or cultural projects.
  • The social commitment of a company improves the brand image and the perception of the company by society. This benefits not only economically in profitability, but also in attracting talent and loyalty of potential customers.

Good Governance Criteria

The so-called good governance criteria are those parameters that safeguard the interests of all those who are affected by business decisions.

Thus, this ESG parameter is no longer focused on the financial interests of shareholders, but instead serves other personal interests. In addition, this parameter is no longer a criterion for large corporations and is already present in smaller companies, in which the interests of all those who are affected by the decisions made by the organization are protected.

It must be borne in mind that environmental, social and corporate governance criteria are not rigid and immutable, but vary depending on the socio-economic, cultural and environmental context in which society finds itself at all times.

More and more, companies pay greater attention to Environmental, Social and Corporate Governance practices, grouped under the acronym ESG, which are essential today for investors around the world in the face of climate change, social challenges and business confidence tests.

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