ESG criteria

ESG criteria (Environmental, Social and Governance) are a set of factors used to assess a company's performance across three dimensions: environmental, social and governance. They allow analysis not only of financial results but also of how an organisation manages its sustainability impacts and risks.

They have become a common language among investors, regulators and customers for measuring a company's resilience and responsibility beyond the bottom line.

The three ESG pillars

• Environmental (E): management of the carbon footprint and greenhouse gas emissions, energy efficiency, water use, waste, pollution and biodiversity.
• Social (S): working conditions, health and safety, diversity and inclusion, human rights, and relationships with communities and the value chain.
• Governance (G): business ethics, transparency, the composition and functioning of governing bodies, risk management and anti-corruption. It connects with environmental governance.

Who uses ESG criteria

ESG criteria have different users:

• Investors: integrate ESG into their decisions through socially responsible investment (SRI), to assess long-term risks and opportunities.
• Regulators: frameworks such as the Corporate Sustainability Reporting Directive (CSRD) require in-scope companies to report sustainability information, and the Sustainable Finance Disclosure Regulation (SFDR) governs ESG transparency for financial products.
• Customers and partners: increasingly request ESG information in procurement and along the supply chain.

ESG versus CSR

ESG is not exactly the same as corporate social responsibility (CSR). CSR is a broad approach to how a company contributes to society and the environment through its practices. ESG, by contrast, is a more structured framework, with measurable indicators, used mainly in the financial and investment world to assess performance and risk. In practice, ESG works as a way to measure and compare what CSR sets out in more general terms.

How to measure ESG performance

For ESG to be useful, it must rest on reliable, comparable data. This means defining sustainability indicators (KPIs), collecting information systematically and, where relevant, aligning it with the applicable reporting frameworks. Data quality is what distinguishes a credible ESG strategy from a mere image exercise.

Measure your ESG performance with Manglai

Moving from intention to data is the challenge of any ESG strategy. Discover how Manglai can help you measure your environmental footprint, structure your indicators and prepare your sustainability information rigorously.