The COVID-19 pandemic has highlighted the urgent need to address climate change as part of the environmental, social and corporate governance (ESG) issues of businesses and corporations.
In a poll Verdict conducted to determine which of the three ESG factors is most important to company rankings, a majority of 45% voted for environmental factors as the most important, while 37% voted for governance. business and 18% for social factors. The most important.
Social factors come second, according to 56% of respondents, followed by corporate governance (23%) and environmental factors (21%).
Corporate governance ranks third for 40% of respondents, followed by environmental factors (34%) and social factors (26%).
The analysis is based on 241 responses received from Verdict readers between February 1 and April 12, 2021.
Importance of ESG factors
The three ESG factors are generally interrelated and also drive the sustainable performance of a company or business, albeit to varying degrees. Investors use these non-monetary factors in their search for potential growth opportunities and significant risks.
Each of the ESG factors has a different material effect on a company or sector. Environmental factors, for example, are more important for the renewable energy sector, but not as important for the service sector.
Environmental issues have currently garnered attention amid the coronavirus pandemic from a political and economic perspective. Climate change, global warming and carbon emissions are quantifiable and can be easily reported by a company, although social and governance factors are equally important in attracting investors.