What is ESG (Environmental, Social, Governance) criteria?
ESG criteria refer to the set of standards used by investors, companies, and other stakeholders to assess a company’s operations and its impact on the environment, society, and governance. These criteria are used to evaluate how well a company is managing risks and opportunities related to environmental, social, and governance issues. In Switzerland, ESG considerations are becoming increasingly important in the context of sustainable investing, corporate responsibility, and regulatory compliance.
Key Elements of ESG Criteria
- Environmental: This criterion evaluates how a company manages its environmental impact, including its efforts to reduce carbon emissions, conserve resources, manage waste, and protect biodiversity. It also considers how the company addresses climate change, energy efficiency, and pollution.
- Social: The social aspect focuses on how a company manages relationships with its employees, suppliers, customers, and the communities in which it operates. This includes issues such as labor practices, human rights, diversity and inclusion, product safety, and community engagement.
- Governance: Governance refers to the leadership, internal controls, transparency, and ethical behavior of a company. It includes the company’s board structure, executive compensation, shareholder rights, and how it ensures accountability and fairness in its operations.
In Switzerland, ESG criteria are increasingly influencing investment decisions, corporate practices, and regulatory frameworks. Companies are being urged to report on ESG performance, and many investors are considering these factors alongside traditional financial metrics when making investment choices. By prioritizing ESG factors, companies can mitigate risks, foster long-term sustainability, and contribute to a more responsible business environment.