Today, companies and investors have started to make decisions by considering not only financial performance but also environmental and social impacts. The pioneer of this transformation was ESG (Environmental, Social and Governance) principles. So, why has ESG become so popular and why has it become a necessity for the business world?

What is ESG?

ESG stands for "Environmental, Social, and Governance". ESG is a system used to assess and manage the performance of companies and investors in sustainability and social responsibility. ESG criteria, which include these three basic elements, refer to environmental, social and governance factors and their general descriptions are as follows.

Environmental

Evaluates the company's environmental impacts and sustainability practices. This factor includes environmental impacts such as carbon emissions, energy use, waste management and natural resource utilisation.

Social

It evaluates the company's relations with society and its social impacts. It includes topics such as employee rights, supply chain management, social contributions, diversity and inclusion.

Governance

It evaluates the company's performance on issues such as governance structure, ethical standards, transparency and shareholder rights. Good governance is important for the long-term sustainability and success of the company.

ESG factors aim to measure a company's financial performance as well as its long-term sustainability and social impact. At the same time, they provide guidance for investors on making sustainable and responsible investments. Investors generally evaluate companies based on ESG criteria and take these criteria into account in their investment decisions.

Why ESG is Important?

Risk Management:

ESG is seen as a way to assess non-financial risks. By considering environmental and social factors, companies can better manage future risks.

Investor Demand:

Today, many investors focus not only on financial return but also on sustainability performance. Demand for ESG-compliant companies is increasing.

Social Expectations:

Consumers and society expect companies not only to be profitable, but also to fulfil their environmental and social responsibilities.

Future of ESG

The popularity of ESG is expected to continue to increase. By having to adopt sustainability principles and be transparent in this regard, companies are in a position to gain the trust of both society and investors.

Conclusion

ESG stands out as the representative of sustainability and responsibility in the business world. This set of principles measures not only a company's financial performance but also its environmental and social impacts, making it a critical factor for future success. In the developing world, companies that comply with ESG principles are more likely to be more competitive and sustainable.

As Diem Mühendislik Mimarlık, we continue our necessary efforts to support sustainability and social responsibility around the world. Our commitment to Environmental, Social and Governance (ESG) principles shape the way we do business and reflect our commitment to leaving a more sustainable world for future generations.