What is ESG and why should you care?

By L Marketing Online

03 Aug 2022

low-carbon-energy.jpg

ESG (Environmental, Social and Governance) has become vital criteria that are more important for businesses than ever in today’s growing climate crisis.

The climate crisis has been a growing concern across the globe for several years now, and it’s led to a variety of changes to state legislation on green practices for businesses.

The UK has become the first major country to make a legally binding commitment to achieving Net Zero by 2050, so now many businesses are following strict new guidelines to ensure that their companies achieve the legally mandated Net Zero target, and ESG is playing a key part in that.

As experts with commercial solar panels and sustainability here at Low Carbon Energy, we’ve collected everything you need to know about ESG.

What is ESG?

ESG stands for Environmental, Social and Governance. Basically, it’s a list of key criteria used by investors to evaluate companies that they might want to invest in. In other words, it assesses how your business performs from an environmental perspective, how it approaches social issues, and how your business is governed from the top down.

Crucially, ESG is used by investors to identify companies that could potentially present a higher financial risk moving forward. Now, there’s technically no standardised way of measuring ESG. Each differs in their criteria ever so slightly but there are a few general similarities it’s worth noting.

The ESG guidelines are split into three distinct categories:

Environmental – this assesses your company’s energy use, waste, pollution, natural resource conservation, and treatment of animals. It’s also used to evaluate any environmental risks a company might face and how they manage them.

Social – the social criteria looks at your company’s business relationships. Does your business donate to the local community, or encourage employees to perform volunteer work? Does your company maintain working relations with other businesses that hold similar values to it? Do your company’s working conditions hold health and safety in high regard? And so on.

Governance – investors are very keen to know that a company uses accurate and transparent accounting methods. This is mainly to give them assurances that the company isn’t participating in any illegal activities. This criteria is also there to make sure that your business avoids any potential conflicts of interest between its board members, and that you’re not using any political contributions to obtain unduly favourable treatment.

ESG-based investments soared in 2020, and they’ve not slowed down since. That’s largely because today’s climate crisis is more pressing than ever – investors, business owners and consumers alike are all increasingly conscious of it, and changing their behaviour accordingly.

This is because sustainability is particularly important to investors, who have to think even further ahead than consumers. In a nutshell – today’s investors want to put their money into companies that they think will make them a profit over a prolonged period of time, which marks a departure from the previously ‘safe’ investments in fossil fuels in decades gone by.

The United Nations is looking to move away from fossil fuel consumption in the years to come, and what they say has massive influence over how people react to the climate crisis. According to a report from the UN Intergovernmental Panel on Climate Change, human influences have played a vital role in contributing to the climate crisis, and some forms of climate disruption are now locked in for centuries. UN Secretary-General Antonio Guterres stated in response that this report must ‘sound a death knell for coal and fossil fuels before they destroy our planet’.

With mounting pressure from UN and the UK government on businesses to move away from fossil fuels, many investors have been deterred from putting their money into companies that don’t adhere to the ESG criteria. That makes them worth prioritising to make sure your business gets the maximum attention from investors, and maximum success in turn!

By following ESG criteria, you secure your company’s future as an investable prospect. On the other hand, companies that run exclusively on fossil fuels at the minute will suffer from this shift in agenda so it’s important to try and make changes as soon as possible.

In years gone by, responsible investments had a reputation for requiring some kind of sacrifice on the investors part from a profit perspective. Greener investments weren’t as common place as they are now, as environmental issues weren’t as highly regarded as they are today, so you were unlikely to make a profit on a green company.

But things have changed. Investors now believe that environmental, social, and governance criteria have a practical purpose. By following ESG criteria they’re able to avoid companies whose practices are deemed as a risk factor which could lead to a drop in share prices in the future.

ESG criteria will play an increasingly vital role in determining whether your company is treated as an attractive prospect by potential investors in the coming years.

Latest news

1

Velocity seals Airbus extension worth up to $54m Velocity Composites Has Announced Its Entry Into The Us Market

Velocity seals Airbus extension worth up to $54m

08 Oct 2025

2

First speakers confirmed for Lancashire Business Day Dave Walker with Richard Slater at Lancashire Business Day

First speakers confirmed for Lancashire Business Day

08 Oct 2025

3

Hemmings steps down as PNE chairman as hunt begins for new investors Craig Hemmings

Hemmings steps down as PNE chairman as hunt begins for new investors

08 Oct 2025

4

Chamber calls for three council county Lancashire County Council County Hall

Chamber calls for three council county

08 Oct 2025

5

Victorian Plumbing reports strong financial performance Victorian Plumbing Leyland

Victorian Plumbing reports strong financial performance

07 Oct 2025

Background image for hub sign up block

LBV Hub

Leverage Lancashire Business View platforms

Post your news
Post your events
Post your offers
Build your network
Improve your SEO
Gain coverage in the magazine
Sign-up
Events
CMI Level 5 Management and Leadership Course
UCLanAerialCampus.jpg.jpg
LBV Hub Seminars
21 Feb 2025 - 21 Feb 2026

CMI Level 5 Management and Leadership Course

Preston Campus, Preston , PR1 2HE

09:00 - 17:00

CMI Level 5 Project Management Course
UCLanAerialCampus.jpg.jpg
LBV Hub Seminars
21 Feb 2025 - 21 Feb 2026

CMI Level 5 Project Management Course

Preston Campus, Preston, PR1 2HE

08:00 - 17:00

Help to grow management course
Help to grow - barriers to growth.png.png
LBV Hub Seminars
26 Sep 2025 - 16 Dec 2025

Help to grow management course

Preston Campus , Preston , PR1 2HE

09:00 - 15:00

Empowering Franchise Growth in the North West
Empowering Franchise Growth in the North West event
LBV Hub Seminars
09 Oct 2025 - 09 Oct 2025

Empowering Franchise Growth in the North West

Forbes Solicitors, Sceptre Way, Walton Summit Centre, PR5 6AW, PR6 6AW

08:00 - 10:00

Empowering franchise growth in the North West
TFA Event - Empowering Franchise Growth.jpg.jpg
LBV Hub Seminars
09 Oct 2025 - 09 Oct 2025

Empowering franchise growth in the North West

Forbes Solicitors Sceptre Way Walton Summit Centre , Preston, PR5 6AW

08:00 - 10:00

Advantage: AI – A Workshop for Business Leaders – Oct 10th
Ai 10.10.png.png
LBV Hub Seminars
10 Oct 2025 - 10 Oct 2025

Advantage: AI – A Workshop for Business Leaders – Oct 10th

Door4 Office, Burnley Wharf, Burnley, BB11 1JG

09:00 - 12:00

Unlocking major project opportunities in the North West
Lancs-cham-logo.jpg.jpg
LBV Hub Seminars
15 Oct 2025 - 15 Oct 2025

Unlocking major project opportunities in the North West

Strathmore Hotel, Morecambe, LA4 5AP

08:00 - 10:00

The New Employee Rights Landscape: Day One Compliance Essentials
EventBrite NORi - 15th Oct 2025 Webinar.png.png
LBV Hub Webinar
15 Oct 2025 - 15 Oct 2025

The New Employee Rights Landscape: Day One Compliance Essentials

Microsoft Teams, Microsoft Teams, PR253XH

13:30 - 15:00

October Freelancer Meet-Up
LBV Hub Networking
16 Oct 2025 - 16 Oct 2025

October Freelancer Meet-Up

Society1, Coworking Space, Preston, PR1 3LT

10:00 - 11:30

The Autumn Re set - pour me a wine
LBV Advert_Autumn Reset 1200 x 630px.png.png
LBV Hub Networking
16 Oct 2025 - 16 Oct 2025

The Autumn Re set - pour me a wine

The Artistry House , Preston , PR1 3JJ

17:30 - 19:30

The Business Network Central & East Lancashire
LBV Header (26).png.png
LBV Hub Networking
16 Oct 2025 - 16 Oct 2025

The Business Network Central & East Lancashire

Stanley House, Blackburn, BB2 7NP

11:30 - 14:15

Women scaling up Blackpool Fylde and Wyre
LBV Hub Seminars
22 Oct 2025 - 09 Jan 2026

Women scaling up Blackpool Fylde and Wyre

The Small Business Academy, Blackpool, FY4 5JX

09:30 - 15:30

Advertise with us

Reaching 50,000 members, our print, digital and event platforms offer a fantastic way to raise your business profile and help you grow.

Find out more LBV124 Online Graphic
Subscribe now

Weekly news bulletin