What does ESG actually stand for?
ESG stands for "Environmental, Social and Governance", or "Environmental, Social and Business Ethics" in Norwegian. In concrete terms, this represents a holistic approach to sustainability.
Figuratively speaking, it's about the footprint your company leaves in all areas of the world we live in. So if you want to say something about your ESG, you simply have to start by asking yourself some simple but big questions;
- How do we impact the environment?
- How do we treat the people who are somehow connected to us and our operations?
- What business ethical choices do we make in our everyday lives?
ESG describes a three-part focus on the non-financial considerations your company takes into account in its operations - each of which affects the climate and environment, social conditions and rights.
Why ESG?
There are obvious reasons to follow ESG, but it is not always clear how this can affect the company. For example, ESG can be used as part of a financial risk assessment, where a good ESG score is expected to provide a more sustainable, long-term return. And in many ways, this way of thinking is also part of how we generally think here in Norway.
Joana Belo Pereira is Product Manager EU Taxonomy at Factlines AS and talks about a clear paradigm shift in this country. "Looking at Norway's history, we are now moving away from the pure oil nation we have been for many years. We see the need for a more sustainable business sector at all levels, which means we're seeing a general shift." And this is not just about the fact that oil will one day run out - it's just as much about Norway's historical footprint for the future.
ESG in practice
In other words, ESG sets guidelines for how we work on a more moral and ethical level. Joana explains it well with a simple example: "You can have vegan production of packaging made from potato flowers. Apparently, ESG is taken care of in every way in relation to the environment, but if you have to use slaves to get these products to the market, you're breaking both the social aspect and the business ethics part. It doesn't help that the end product scores sky-high on the climate-friendly scale - on the way there, so many other important considerations have been violated that the overall ESG accounts don't add up in any way."
A simple rule of thumb that could probably apply to any company is that the things you do today, you should also be able to do in five years' time without affecting nature and society. "If you can relate to that, then you're doing the right thing in terms of ESG," Joana concludes.
And making sure that people, nature and the entire society around us can live well with the decisions and directions we take with our operations is perhaps not the worst thing we can work with.
