Environmental, Social, and Governance (ESG) is a framework used to evaluate organisations’ performance in environmental protection, social responsibility, and governance practices. These are three factors that are increasingly used to evaluate a company’s performance and impact on society. Investors and other stakeholders use ESG criteria to assess risks and opportunities.
ESG is an important practice that ensures success and well-being of trade organisations due to several reasons:
- Companies that follow ESG principles focus on sustainability, fair labour, and ethical practices, making trade more trustworthy and future-proof.
- Many buyers and investors prefer working with businesses that care about the environment, treat workers fairly, and follow good governance rules.
- Governments and banks also encourage ESG-friendly trade through incentives and regulations.
In short, ESG in trade helps protect people, the planet, and profits by making business practices more transparent, ethical, and sustainable.