Do you know what is esg? Why are companies now focusing on the sustainable development of esg (environment, society, corporate governance)? Is this related to the corporate social responsibility (CSR) and sustainable development goals (SDGs) that have been widely advocated in recent years? It is worth mentioning that even if the financial regulatory agency stipulates that the paid-in capital of listed companies must reach 2 billion yuan, these companies must still prepare and submit a sustainability report, and list in detail the information on the company's investment in ESG.
What is ESG?
ESG has become a hot topic in the capital market in recent years. It is an indicator for evaluating a company's operations and includes three aspects: environmental protection, social responsibility and corporate governance. The main goal of ESG is to realize the sustainable operation of enterprises, and CSR and SDGs are concepts closely related to ESG.
The emergence of ESG is to solve the problems that business owners claim to care about the environment, social responsibility and ethics, but there is no objective indicator to evaluate the performance of the company. ESG has become one of the indicators to measure the sustainable development of enterprises and has attracted the attention of the capital market. In the field of ETFs, some products have attracted the attention of investors, such as "00692 Fubon Corporate Governance", "00850 Yuanda Taiwan ESG Sustainability" and "00878 Cathay Pacific Perpetual High Dividend".
The meaning of CSR
The concept of CSR was first proposed by United Nations Secretary-General Kofi Annan in 1999, which requires companies to commit to abide by ethical norms while contributing to economic development, and to improve the quality of life of employees, their families, local communities and society as a whole. After the financial turmoil, the tide of corporate social responsibility has once again pushed up. ESG refers to how to practice the principles of CSR, evaluating a company's sustainable development indicators from the aspects of environment, society, and corporate governance.
Emergence of SDGs
The United Nations adopted the Sustainable Development Goals (SDGs) in 2015, which is also a concrete guideline that can be implemented. Both SDGs and ESG are committed to achieving sustainable business development, and the two are complementary. In my country, even the Financial Regulatory Commission requires listed companies with a paid-in capital of 2 billion yuan to prepare and submit a sustainability report, listing the relevant instructions for investing in ESG. This also shows that ESG has become one of the important indicators for corporate development. one.
Differences between ESG, CSR and SDGs
ESG (Environmental, Social, Governance) standards are indicators used to evaluate business performance, while SDGs (Sustainable Development Goals) are a more detailed guide to help countries accelerate sustainable development. The combination of these two standards can promote the high growth of enterprises and create more social benefits.
The predecessor of SDGs is the Millennium Development Goals (MDGs) published by the United Nations in 2000, which aims to help countries with slow development get rid of poverty. Subsequently, the United Nations reviewed the Millennium Development Goals, and adopted 17 sustainable development goals (goals) and 169 specific goals (targets) in September 2015, as a way for countries around the world to strive to promote sustainable development by 2030. direction.
In ESG scoring, a company's long-term investment in social assets is one of the key factors. Taking the top 3,000 companies by market capitalization in the United States as an example, companies with higher ESG scores were less affected when the financial crisis broke out because they won the trust of investors. On the other hand, environmental risk has become one of the problems facing the world, so investors and citizen groups have begun to strictly monitor companies and governments. As one of the world's largest asset managers, the Norwegian sovereign wealth fund (GPFG, Government Pension Fund of Norway) has set up an ethics committee to regularly review companies' ESG standards, and if they fail to meet the standards, they will be blacklisted.
In the past, companies only needed to pay attention to financial data, but if they secretly withdraw deductions, discharge waste water, and violate consumer rights, the company's reputation will be damaged, and investors will also lose confidence. Today, companies that pay attention to ESG standards not only have transparent financial reports, but also include stable, low-risk operating models, and their long-term performance is relatively stable. Therefore, companies should pay attention to complying with SDGs and ESG standards, which will help improve corporate sustainability, create more social benefits, and help win the trust and support of investors.