Sustainable Investing Glossary

ESG definition

What is the definition of ESG?  ESG means using Environmental, Social and Governance factors to evaluate companies and countries on how far advanced they are with sustainability. Once enough data has been acquired on these three metrics, they can be integrated into the investment process when deciding what equities or bonds to buy.

ESG factors: Environmental

Environmental factors include the contribution a company or government makes to climate change through greenhouse gas emissions, along with waste management and energy efficiency. Given renewed efforts to combat global warming, cutting emissions and decarbonizing is become more important.

ESG investing
ESG investing
Wir integrieren Umwelt-, Sozial- und Unternehmensführungskriterien (ESG) in den meisten fundamentalen und quantitativen Strategien.

ESG factors: Social

Social include human rights, labor standards in the supply chain, any exposure to illegal child labor, and more routine issues such as adherence to workplace health and safety. A social score also rises if a company is well integrated with its local community and therefore has a ‘social license’ to operate with consent.

ESG factors: Governance

Governance refers to a set of rules or principles defining rights, responsibilities and expectations between different stakeholders in the governance of corporations. A well-defined corporate governance system can be used to balance or align interests between stakeholders and can work as a tool to support a company’s long-term strategy. 

Governance can also refer to the standard of government of nations. Robeco measures ESG levels using RobecoSAM’s proprietary Corporate Sustainability Assessment for companies, and Country Sustainability Ranking for governments, to give overall ESG scores. There is some crossover between the two, particularly for multinational companies.

Also read: ESG funds

Real estate fund cuts its carbon footprint
Real estate fund cuts its carbon footprint
Robeco Sustainable Property Equities has scored well above average for sustainability in an industry survey for the sixth year in a row.
24-01-2020 | Einblicke
From alchemy to gold – how ESG adds value in a Robeco fund
From alchemy to gold – how ESG adds value in a Robeco fund
Sustainability was responsible for 20% of the outperformance in a Robeco fund over three years, new analysis shows.
23-01-2020 | Einblicke
Podcast: Es ist an der Zeit, dass Assetmanager Geld sprechen lassen
Podcast: Es ist an der Zeit, dass Assetmanager Geld sprechen lassen
Wenn wir anfangen, viel mehr auf lange Sicht und in nachhaltige Lösungen zu investieren, werden die Dinge sehr, sehr schnell gehen, sagt Robecos CEO, Gilbert Van Hassel.
22-01-2020 | Podcast