The Benefits and Challenges of an ESG Framework

Michael R. Wood is a Business Process Improvement & IT Strategist Independent Consultant. He is creator of the business process-improvement methodology called HELIX and founder of The Natural Intelligence Group, a strategy, process improvement and technology consulting company. He is also a CPA, has served as an Adjunct Professor in Pepperdine's Management MBA program, an Associate Professor at California Lutheran University, and on the boards of numerous professional organizations. Mr. Wood is a sought after presenter of HELIX workshops and seminars in both the U.S. and Europe.

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Topics: Organizational Culture, Strategy, Sustainability

ESG—which stands for environmental, social and governance—is a term that has become increasingly popular in recent years. It refers to the three key factors used to determine an organization’s sustainability and ethical impact on society and the world.

The origin of ESG can be traced back to the 1960s, when socially responsible investing (SRI) first emerged as a way for investors to align their investments with their values. However, it wasn’t until the early 2000s that ESG began to gain traction as a mainstream framework for deploying a sustainability strategy. This was mainly due to growing concerns about climate change and other environmental issues, as well as an increased focus on corporate social responsibility. By considering a company’s environmental impact, social practices and governance structure, stakeholders can identify companies well-positioned for long-term contributions to a more sustainable future.

Major ESG proponents have become increasingly vocal in recent years as more and more stakeholders are looking to incorporate ESG factors into their capital investment decisions. These supporters of ESG take many forms, including regulatory bodies, non-governmental organizations (NGOs), and industry groups.

• One of the most significant ESG influencers is the United Nations Principles for Responsible Investment (PRI), which …

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