*NOTE: As of 2022, multiple ESG measuring frameworks exist, though none (yet) apply a set of universal standards.

Environmental factors consider a business' practices around conservation of biodiversity and the natural world. Things like: carbon emissions, air + water pollution, green energy initiatives, waste management, water usage

Social factors examine how a business treats people both inside and outside of the company. Things like: diversity and inclusion, data and cyber security, customer satisfaction, company sexual harassment policies, supply chain health, fair labor practices

Governance factors assess business operations and how a company governs its business. Things like: diversity of board members, political contributions, executive pay, large-scale lawsuits, internal corruption, lobbying

• ESG recalibrates business modelling and design to include non-financial capital risks and opportunities in its assessment of potential success

• ESG embeds longevity practices into the business model and prioritizes positive impact aligned to results across the business ecosystem

• ESG integrates organizational drivers, incentives and rewards for longer-term outcomes alongside shorter-term outputs

ESG integrates with CSR to foster social accountability for quality business behaviors.

In practice, this might look like:

• Adopting and implementing Green Initiatives to reduce carbon footprint and waste

• Giving back to the community through volunteer, philanthropic and in-kind contributions

• Institutionalizing a Code of Ethics, and ensuring all business decisions are values-based and ethics-driven

• Implementing equitable hiring, firing and career advancement strategies for all workers, at all ages and career stages

• Prioritizing disease prevention, health promotion and sustainable living conditions for the community which the business currently and prospectively serves

Learn more about ESG via CFA Institute and World Economic Forum