ESG is an acronym that stands for Environment, Social, and Governance, i.e. the 3 Pillars of Sustainability for the European Union: the three fundamental factors for verifying, measuring, and supporting the sustainability commitment of a company or organisation. Specifically, the definition of ESG takes the form of a set of criteria that a company's operations must be inspired by. These are criteria that are used by investors, initially by socially aware investors and today by investors in general, to assess and select potential investments. These criteria are best explained as follows, the meaning of ESG is as follows
"E" of Environment: these are environmental criteria and assess how a company behaves towards the environment in which it is located and the environment in general.
"S" of Social: these are criteria relating to social impact and examine the impact and relationship with the territory, people, employees, suppliers, customers and in general with the communities with which it operates or with which it has relations.
"G" of Governance finally concerns the issues of a company management inspired by good practices and ethical principles, in this area the issues under examination concern the logic linked to the remuneration of managers, respect for shareholders' rights, transparency of decisions and company choices, and respect for minorities.
ESG criteria are important because they also allow environmental, social and governance activities to be traced back to objective and agreed measurement criteria.