ESG History and Principles

The United Nations (UN) has proposed a framework for sustainable and responsible investment known as ESG, encompassing environmental, social, and governance considerations. This framework encourages companies to not only focus on profits, but also consider their impact on the environment, communities, and ethical governance practices.

The 'Who Cares Wins' initiative, launched in 2004 by UN Secretary-General Kofi Annan, aimed to raise awareness about ESG issues and encourage financial institutions to consider them in their investment decisions. This initiative marked the early emergence of ESG, advocating for incorporating social and environmental factors beyond financial returns.

The Principles for Responsible Investment (PRI) was established in 2006 as a UN-supported initiative to promote the integration of ESG considerations into investment practices. PRI seeks to guide investors on how to incorporate these factors into their decision-making processes, ultimately influencing the way companies operate and address social and environmental concerns.

The United Nations Sustainable Development Goals (SDGs) were adopted in 2015, outlining 17 interconnected objectives aimed at achieving a more sustainable and equitable global future by 2030. These goals serve as a globally recognized framework for implementing sustainable practices, advancing social progress, and addressing environmental challenges.

The 'G' in ESG stands for Governance, encompasses all aspects of how a company is managed and operated. This encompasses factors like corporate governance, transparency, accountability, and ethics.

The PRI outlines six key principles that investors should consider when integrating ESG issues into their investment practices.

The 'Who Cares Wins' report emphasized the importance of transparency and accountability in addressing ESG issues, urging companies to communicate their commitment to sustainability and responsible business practices.

The PRI emphasizes the importance of both 'doing' and 'showing' when it comes to integrating ESG issues into investment practices. Investors not onlty need to incorporate ESG considerations into their investment decisions, but also demonstrate their commitment to responsible investment principles.

The UN initiative launched in 2004 by Kofi Annan to encourage investors to consider ESG factors. It marked the first appearance of the term 'ESG' in the finance world.

The UN initiative launched in 2006 to promote responsible investment practices, with six key principles for incorporating ESG factors into investment decisions.

The UN initiative adopted in 2015, outlining 17 interconnected objectives and 169 targets to achieve a better future for all by 2030. These goals encompass environmental, social, and economic aspects.

Refers to the environmental impact of a company's operations and products. It includes aspects like climate change, pollution, and resource usage.

Refers to the social impact of a company's actions. It includes aspects like fair labor practices, human rights, and community engagement.

Refers to the company's governance practices, including its leadership, corporate structure, and transparency. It signifies ethical and responsible management.

The PRI emphasizes that investors should not only incorporate ESG factors into their investment decisions but also demonstrate their commitment to responsible investment practices.