Definition
ESG (Environmental, Social, Governance)
ESG refers to the environmental, social and governance factors used to assess a company's sustainability and ethical impact alongside financial performance.
ESG investing evaluates how a company manages its environmental footprint, treats employees and communities, and governs itself. In India, SEBI requires the top listed companies to file a Business Responsibility and Sustainability Report (BRSR) disclosing detailed ESG metrics, and has introduced BRSR Core for assurance.
ESG matters to investors because poor practices can create financial and reputational risk, while strong ESG can signal resilience. The field also attracts criticism over 'greenwashing', prompting SEBI to tighten ESG rating-provider and disclosure norms.
Related terms
- Business Responsibility and Sustainability Report (BRSR)The BRSR is a SEBI-mandated disclosure in which large listed companies report their ESG performance in a standardised format.
- ESG RatingAn ESG rating is an assessment by a rating provider of how well a company manages environmental, social and governance risks.
- Corporate GovernanceCorporate governance is the system of rules, practices and controls by which a company is directed, overseen and held accountable to its stakeholders.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.