ESG stands for Environmental, Social and Governance. In the ESG framework, these are the three pillars that companies are expected to report on.
In the case of the corporate sector, financial assessment and analysis has a long history, while ESG is intended to analyse non-financial opportunities, risks and impacts from an environmental, social and governance perspective. ESG is becoming more and more prominent, as companies are expected to demonstrate how they fit in with global sustainability goals to virtually all stakeholders (be it a global organisation (UN, EU, etc.) or a local partner (investor, employee, customer, etc.).
In the ESG report, the organisation must demonstrate:
E - How the organisation's impact on the environment has been mapped, what negative consequences this has, what interventions it has implemented and plans to implement in the future to conserve natural assets. The environmental pillar is perhaps the most complex, as it can have varying degrees of impact depending on the profile of the company, including climate change, greenhouse gas emissions, air pollution, water pollution, energy management, waste management, etc.
S - How it invests in social engagement, social values, human rights, customer care, employee rights, employee development opportunities. For example, how it ensures that its employees with reduced mobility have access to suitable working conditions, or how it makes its products or services available to disadvantaged people.
G - How and according to what internal rules and regulations the organisation ensures transparency, financial transparency and business ethics. For example, how the management structure is set up, the proportion of women, the use of accounting standards, etc.
ESG was originally developed to meet the needs of investors to assess the sustainability of listed organisations, but has now evolved into a reporting framework and has been adopted by the European Union and Member States.
In the European Union, the CSDDD (Corporate Sustainability Due Diligence Directive) has laid the foundations for the due diligence obligations of companies for sustainability purposes. The principles and expectations it sets out should be incorporated into the legislation of all Member States. In Hungary, the ESG Act entered into force on 1 January 2024, the aim of which is to ensure that different companies can be assessed and compared according to specific sustainability criteria.
Therefore, one of the pillars of ESG is the assessment of the impact on the environment. With more than 10 years of experience, our company supports its partners' energy efficiency projects by providing energy calculations, including the determination of greenhouse gas emission reductions.