ESG stands for Environmental, Social and Governance. It’s a way of measuring how a company is doing beyond just profits. Instead of only looking at financial performance, ESG asks: How is this company treating the planet? How does it treat people? And how is it being run?

Let’s break that down.

Environmental factors look at how a business impacts the planet. This can include its energy use, waste, pollution, and how it’s responding to climate change. For example, is a company reducing its carbon footprint? Is it switching to renewable energy or still relying on fossil fuels?

Social factors focus on how the business treats people, employees, customers, suppliers, and communities. Does it pay workers fairly? Does it support diversity and inclusion? Does it give back to the community? These are all social aspects that matter to both people and society.

Governance refers to how the company is managed. This includes whether it has fair and transparent leadership, how decisions are made, and whether it acts ethically. Are there checks and balances? Are board members diverse and independent? Is the company being honest with investors?

So, why does ESG matter?

First, it gives a more complete picture of a business. A company might be making money, but if it’s polluting heavily or mistreating its workers, it’s likely to face problems down the track. ESG helps spot risks that don’t show up in the balance sheet. A poor environmental record could lead to lawsuits or government penalties. Poor workplace practices could result in high turnover or public backlash.

Second, ESG is becoming a major consideration for investors. More and more, people want to put their money into companies that are doing the right thing. They don’t just want good returns, they want their investments to align with their values. And research shows that companies with strong ESG practices are often more resilient and better prepared for the future.

Third, ESG is shaping how businesses operate. Regulations are tightening, especially around emissions and transparency. Customers are more informed and more likely to call out bad behaviour. Employees, especially younger generations, want to work for companies that care about more than just profit.

Importantly, ESG isn’t about being perfect. It’s about being aware, being responsible, and taking steps to improve. Companies that commit to ESG aren’t just ticking boxes, they’re setting themselves up for long-term success in a changing world.

In simple terms, ESG is about business with a conscience. It’s about making money and making a positive impact. In a world facing big challenges, like climate change, inequality, and mistrust in institutions; how businesses respond matters more than ever.

And for those who think ESG is just a trend: it’s not. It’s a shift in how we think about value. Not just what a company earns, but how it earns it. And that makes all the difference.