The key terms to know
The non-financial areas of environment, social and governance. Companies are increasingly asked to provide information about their commitments, performance, behaviours and risks in these areas.
An individual or company whose job it is to look at the ESG information provided by a company and draw conclusions – which may be to award an ESG rating/score, or to make recommendations about whether a company is a sound investment option.
ESG ratings provider
A company that provides ESG ratings, or scores – such as S&P Global. They will ask companies to provide ESG information, possibly through an ESG framework that they or another organisation have created, and employ analysts to assess this information.
ESG frameworks and standards
A set of guidelines or requirements that outline the information a company should provide, and possibly standards they should be operating at.
Companies’ responses may then be used to create ESG ratings. Organisations providing these frameworks include the Global Reporting Initiative (GRI) and the Carbon Disclosure Project (CDP). Some frameworks or standards may not cover all three ESG areas comprehensively.
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