The Origins of ESG?
There is a growing body of standards and requirements that regulate this area, some legally binding, others not. ESG did not come from any single source, but rather it was a development sparked by institutional investors demanding that if they are to invest in a business, it must meet certain standards in a variety of areas, depending on the type of business in question.
ESG issues are usually listed under three broad headings: “Environmental”, “Social” and “Governance” and more information is available under each of these headings. There is a degree of overlap between issues falling under each of these.
It should be emphasized though that not all of the elements of ESG will be applicable to all businesses. Whether any particular ESG element, issue or risk is relevant to a particular business will depend on various factors, including the type of business, its size, whether it is a company or is in unincorporated form, whether it has shares that are publicly traded, whether it is engaged in an activity that is highly regulated, whether it operates outside the UK or whether it has dealings with anyone outside the UK.