The impetus for ESG

Leading companies are shifting the way they do business and emphasizing relationships and business activities that create value in the long term. And the major stakeholders in those companies—their boards of directors and their investors—are in turn driving that emphasis, looking to executive managers to focus on long-term sustainability.

That is the core of ESG—Environmental, Social and Governance, the business approach that takes a comprehensive look at what it means for an organization to fully commit to sustainability and what it means in practical terms. ESG dates back to at least 2006, when the United Nations issued a report called Principles for Responsible Investment (PRI) and obtained 100 signatories from among the world’s largest institutional investors. Under the U.N. Principles, ESG criteria was for the first time required to be part of financial evaluations of companies. Since then, the PRI, as it’s known, has grown to more than 3,000 signatories and more than $80 trillion in assets under management.