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
We integrate environmental, social and governance criteria into the majority of our investment processes.
More about ESG investing

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

Exhaust-ive engagement: persuading carmakers to decarbonize
Exhaust-ive engagement: persuading carmakers to decarbonize
Decarbonizing the auto industry can significantly lower greenhouse gas emissions.
05-12-2019 | Visie
Roep om concrete toezeggingen tegen klimaatverandering tijdens COP25
Roep om concrete toezeggingen tegen klimaatverandering tijdens COP25
De landen die deelnemen aan de Klimaatconferentie van Madrid (COP25) moeten de strijd tegen de opwarming van de aarde weer op het goede spoor brengen, zegt Carola van Lamoen van Robeco.
29-11-2019 | Visie
Spearheading the sustainable investing movement
Spearheading the sustainable investing movement
Gilbert Van Hassel discusses leadership in sustainable investing and the S&P Global partnership deal.
21-11-2019 | Interview


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