Environmental, Social and Governance (ESG) criteria are a set of standards that conscious and forward looking individual and institutional investors, buyers and stakeholders use to make decisions related to investments, consumption, business development, etc.

• Environmental criteria consider how a company performs as a steward of nature and how it manages environmental risks - energy use, waste, pollution, natural resource conservation, and treatment of animals.
• Social criteria examine how company manages relationships with employees, suppliers, customers, and the communities where company operates - health and safety, equal opportunities, child labour, forced or compulsory labour, diversity, human rights, community engagements, training and education.
• Governance criteria deals with a company’s leadership, audits, transparency, regulatory compliance, accountability, shareholder rights – policies, process, procedures.

Why knowledge and understanding of ESG is important?

1. For companies - business leaders and investors are becoming increasingly concerned that issues such as climate change, biodiversity destruction, human rights, income and gender inequality, consumer protection, diversity will in years to come pose significant challenges to companies’ long-term prospects, probably even bigger then economic growth rates. These links mean the future profits of companies will be affected by changes in the society and by the environment in which they operate. Understanding how those changes will play out and how companies will adjust and thrive is an important part of any long-term investment decision.
2. For individual and institutional investors - globally, more than a quarter of financial assets under management come with a mandate to incorporate ESG factors. Over 80% of the world’s large corporations currently provide ESG information to the market through the Global Reporting Initiative (GRI). According to theGlobal Sustainable Investment Review 2016 in Asia (excluding Japan), the total figure of ESG funds was less than 1% of Asia's total professionally-managed assets. While Asia’s landscape might not be as mature as Europe, ESG is going to be a hard trend to ignore.
3. For citizens - sustainability can encompass a number of things e.g. recycling, consumption, being resourceful with products and items that we use. Learning about ESG and how we can go sustainable in our private lives has never been more important because every change starts with a change within us.