ESG - Environment, Social and Governance listing page | All Articles

ESG ratings, ESG benchmarking, ESG reporting, ESG indexing. These terms all sound the same, but they’re not. While there are many similarities between them, they’re also very different. Each of them describes a way that a company or a portfolio scores during an ESG assessment, and how that particular assessment was carried out.

Socially responsible investments are becoming more and more popular. ESG investing is arguably one of the most important forms of modern investment. ESG investors are forward-thinking investors who carefully consider a company’s impact and influence over environmental issues, social cohesion, and governance strategies, as well as financial returns. Of course, financial dividends are also important to ESG investors, however, an ESG investor is more concerned about the long-term sustainability of a company rather than short-sighted financial returns.

ESG is an important topic that measures and assesses the overall sustainability and ethical goals of a business, enterprise, or portfolio, but there’s more to ESG than ideological concerns. If deployed correctly, an ESG strategy can reap significant financial benefits and rewards. Naturally, the heart of any ESG strategy should be a strong focus on social good. However, studies have shown a positive correlation between ESG concerns and lucrative financial returns.

ESG is one of the most exciting topics in the real estate business at the moment. It’s a measurement of how well a company or portfolio performs with regard to environmental, social, and governance issues. There is a direct correlation between high ESG scoring and positive financial performance, with ESG criteria being particularly attractive to modern investors. Here, we will outline how real estate portfolios can harness the power of ESG to drive value.

The “E” in ESG stands for Environmental. The state of the environment and the importance of environmental protection is constantly addressed in mainstream media, and it’s an important part of governmental policy, with far-reaching effects that influence the decisions of ordinary citizens too. Governments and citizens are working to limit environmental damage and improve our living conditions, and private enterprises should also do what they can to help mitigate the effects of climate change.

The “S” in ESG stands for Social. Unlike the letter that precedes it (Environmental), Social is much harder to define. In fact, different research houses and institutions have different definitions for it, and some include specific criteria while excluding others. It’s a loose but flexible term that essentially covers all things that could (or should) influence a company or portfolio’s overall social good factor.

The “G” in ESG stands for Governance. Governance can be defined in several ways, depending on the context. For some entities, Governance can be defined as the rules and regulations that a company or business must adhere to. A good example of this could be how local governments conform to rules from larger bodies, such as the European Union, strictly following policies and governing with these laws and rules in mind. However, for the most part, Governance in ESG refers to something entirely different.