ESG came up with the proposal of companies to have a more social responsibility and adopt better governance practices, especially in taking care of the planet. It has gained a lot of notoriety among corporations in a context where society values businesses that respect the environment, people, and good management. These are requirements that reflect the behavior of new generations, who increasingly prioritize the consumption of transparent and responsible brands.
The acronym ESG, which means “Environmental, Social and Governance,” is used to say how much a business seeks to minimize its impacts on the environment, build a fairer world, be more responsible for people and maintain optimized management processes.
Each letter has its importance. The letter E refers to a company’s practices about environmental conservation and its performance on global warming, deforestation, biodiversity and water, and air pollution.
The letter S refers to a company’s relationship with the people who are parts of its universe, such as employee engagement, relationship with the community, respect for human rights, and labor laws.
And finally, the letter G refers to the management of a company, corporate conduct, and the relationship with government entities and politicians.
Despite having gained prominence in recent years, the acronym first appeared at the end of 2004, in an initiative called Who Cares Wins, by the UN in partnership with financial institutions. The idea was to unite institutions from several countries to find ways to involve the topic in the financial market.
Some surveys also point out that, due to consumer demands, businesses that follow good environmental, social, and governance practices are more stable and can bring greater profitability in the long run.
Now, the implementation of ESG in companies has been greatly accelerated in recent years. Due to the climate emergency and the pressure to migrate to carbon neutral models. In addition, nations are committed to 17 sustainable development goals by 2030.
In Europe, new regulations also create incentives towards a sustainable model and penalties for those who don’t follow the proposal direction.
We at Light DeFi came up in August with these concepts. We want to help create a more sustainable world with cleaner practices for the environment.
Keep an eye on our website to find out about our green projects in development.