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Sustainability (ESG)
| Environmental, social, and corporate governance |
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| • What is ESG? • Enacted ESG legislation • Arguments for and against ESG • Opposition to ESG • Federal ESG rules • ESG legislation tracker • Economy and Society: Ballotpedia's weekly ESG newsletter |
Sustainability, in the context of environmental, social, and corporate governance (ESG), is a business management concept that calls on companies to identify and direct specific measures to manage risk, execute strategy, and create long-term growth in shareholder value. The measures considered in sustainability analysis, known as material factors, may encompass a broad range of topics, such as environmental concerns, social issues, and governance practices.[1][2]
Background
Sustainability aims to identify and manage business risks and opportunities that could affect a company's long-term value. Sustainability analysis provides investors with added insight into a company's full risk profile. Through sustainability analysis, companies seek to interpret issues such as climate change, resource scarcity, and population growth as business risks and opportunities.[1]
Evaluating the sustainability of a company requires an analysis of material factors—financial elements deemed fundamental to the long-term success of a company's ESG strategy.[1] Material factors that contribute to sustainability may include "environmental issues like climate change and natural resource scarcity ... social issues like labor practices, product safety, and data security [and] governance matters that include board diversity, executive pay, and tax transparency," according to the global professional services firm PricewaterhouseCoopers.[2] Through sustainability analysis, companies aim to understand material factors in terms of risks and opportunities for their business model.[3]
Noteworthy events
SEC publishes climate disclosure rules (2024)
The Securities and Exchange Commission (SEC) adopted rules requiring public companies to disclose material climate-related risks, including Scope 1 and 2 emissions, governance of climate issues, and climate-related financial impacts in filings. The agency paused the implementation of the rules in April 2024. In 2025, the SEC announced it would no longer defend the rules in court.
See also
External links
Footnotes
- ↑ 1.0 1.1 1.2 PricewaterhouseCoopers, "Sustainability/ESG reporting," accessed February 4, 2021
- ↑ 2.0 2.1 PricewaterhouseCoopers, "ESG oversight: The corporate director's guide," accessed February 4, 2021
- ↑ Deloitte, "How CFOs can manage sustainability risks and create long-term value," accessed February 4, 2021
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