ESG Principles To Know About!

After the COVID-19 pandemic and considering the environmental hazards happening in society, businesses in today’s world are more concerned about bringing into practice the ESG (Environmental, Social, and Corporate Governance) Principles and SDGs (Sustainable Development Goals). These two have become a prerequisite for a business to run efficiently nowadays.

As a business, you need to take care of society as a whole and the environment so it is necessary that you embrace the ESG principles along with the SDGs. In this article, we are going to learn to balance the ESG principles in a beneficial manner and follow sustainable development goals for a business.

What are the ESG Principles?

While in literal terms, ESG stands for Environmental, Social, and Corporate Governance, as a broader term, ESG is a way to check a company’s performance on the basis of three major factors. The three factors are well-defined as below.


The environmental principles focus on devising a strategy in a manner that environmental hazards are reduced. It can be done by reducing carbon emissions by an organization, planning waste disposal and management properly, reducing the use of plastic in packaging or in the industry as well as reverse logistics for the materials that pollute the environment.


The social aspect is all about the way a company connects and communicates with society as a whole. Society not only includes the consumers and customers of the business but also the employers and other individuals who are directly or indirectly influenced or impacted by a business.

To build a healthy social relationship, a company must understand consumer behaviour, take customer feedback, focus on gender equality in terms of salaries or wages paid, have a healthy working environment in an organization, respect human rights and labour laws, etc.


While balancing the ESG principles, Governance is the third factor that needs to be kept in check. Governance refers to the overall administration of an organization. It includes the interests of the customer, employees as well as the shareholders of the company. To achieve this goal, a company must maintain complete transparency of its financial and accounting processes.

Not only this but for better functioning, an organization must be inclined toward having an independent board of directors. Moreover, the anti-corrupt business practices should be followed in the long run. Lastly, a business must collaborate often to minimize conflicts of interest.

A business that can effectively balance the principles of ESG is likely to grow and enhance itself in today’s world.

Why are ESG Principles Important in a Business?

The ESG principles are more focused on the business aspect of protecting the environment. The ESG principles promote a long-term sustainable approach to running a business. Since the ESG principles compel a business to go through its business operations more wisely and adopt sustainable methods for development, it helps a business to set itself apart from its competitors in the modern world.

Furthermore, the businesses following the ESG principles are governed more efficiently than others and so the investors or stakeholders in such businesses have a high chance to earn more profit even in the long run. ESG principles also ensure that businesses remain more transparent and accountable to the stakeholders or investors as well as to the government and the public. Combining all these benefits, and balancing the ESG principles with the SDGs can help a business earn profit and rise a par above the competitors.

How Can a Business Adopt ESG Principles?

Adopting the ESG Principles has become a compliance for business organizations in today’s world to operate successfully while maintaining healthy relationships inside and outside the organization. In order to adopt the ESG principles, a business first needs to understand them and balance the ESG principles in an effective manner. It can be done by the steps given below.

-Make an effort to fully comprehend ESG concepts (consider having your employees take an ESG course for training).

-Form a team to handle the demands of carrying out the ESG agenda (a great chance to create learning communities)

-Identify potential locations that need to be modified to meet these criteria, and invest in the necessary technologies.

-Choose alliances that share your commitment to ESG guidelines.

What are SDGs?

The SDGs or sustainable development goals is a list of 17 goals combined together to be achieved by 2030. This initiative was put forward by the United Nations in 2015. The prime target of the Sustainable Development Goals (SDGs) is to achieve and promote economic sustainability, and environmental sustainability by taking into concern the societies as a whole.

Moreover, the SDGs aim towards eradicating poverty by the end of the set timeline, protecting life on land and sea, bringing into effect clean energy justice, and trying to maintain overall peace and prosperity in other initiatives as well. These goals are well kept in check and their accomplishment by government and non-government organizations is traced after regular intervals of time.

How are SDGs Important?

Sustainable Development Goals are not only important from the perspective of an individual or the society, instead the goals are put forward in a manner that they are likely to benefit a business as well. For instance, with proper regulation of the sustainable development goals, a business is expected to earn better profits and have decent work growth. Along with this, the sustainable development goals are effective in creating more job opportunities for individuals.

Having more job opportunities would surely mean stable economic growth. Amongst the 17 goals, the UN targets to reduce poverty, maintain peace and prosperity, and provide improved and better health benefits to all. When these aspects are balanced with the ESG principles, the after-effect is a sustainable future for the entire mankind.

How do ESG and SDG Work Together?

The relationship between ESG and SDGs helps decide how a corporation, or any business, may achieve sustainable development. The United Nations has now developed 17 SDGs to assist businesses and organizations in implementing sustainable development practices.

The ESG criteria serve as recommendations for figuring out whether a product has positive production externalities that benefit society, the environment, and organizational governance. These variables are also employed by the organization to gauge overall performance.

How is ESG Different from Sustainability?

ESG is a quantitative measurement of the fulfillment of the sustainable goals of an organization.  In contrast to sustainability, which is a framework for making internal capital investments such as installing LED light bulbs or other energy-saving measures, electrifying a transportation fleet, or buying sustainability measurement software, ESG is an investment framework that aids external investors in assessing a company’s performance and risk.

While sustainability criteria are also established by standards groups like the GHG Protocol, they are more scientifically based and standardized. In contrast, ESG is based on standards set by legislators, investors, and ESG reporting organizations. ESG can be measured using dozens of various frameworks, while carbon can simply be measured using nature and physics since it is carbon. In addition to sustainability, ESG also takes into account larger social and corporate governance issues.

Frequently Asked Questions

1. Is ESG part of SDG?

It is partially true that ESG is a part of SDG. In actual terms, ESG is a subset of SDG. ESG is a tool for evaluating an organization’s environmental, social, and governance practices and organizations may succeed through the application of ESG components, which will eventually merge with SDGs, by implementing sustainable development practices into regular company operations, goods, and services. Thus, ESG and SDG are related to one another.

2. Is ESG related to climate change?

The ‘E’ in ESG stands for environment. Thus, the ESG principles and investing in ESG goals greatly influence climate change. ESG principles are focused on reducing carbon emissions. Not only this, a business must ensure to work on proper waste management techniques that are not harmful to the climate. Also, the use of plastic bags should be minimized at all levels of an organization.

3. How does ESG affect society?

The ESG principles focus on achieving societal goals such as reduction in poverty, control of corruption, and protection of human rights, etc.


For any business or organization to work efficiently and increase its profit and growth altogether, it is a prime necessity to understand the ESG principles along with the SDGs and then plan a business strategy that runs in the favor of an individual, the business, the customer, the employees, the stakeholders, the government as well as the society. The goal of the ESG principles is to bring peace and prosperity to society and promote the overall growth and development of the economies by 2030.

Also Read:

East Asia Cultural Traditions, Foods, and Etiquette

Dominate the Music Industry with Effective Marketing Strategies

Places to Visit in Australia: Top 11 Outstanding Places

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button