ESG stands for Environmental, Social, and Governance. In simple terms it is a framework used to evaluate a company's sustainability and ethical impact.
Sustainability factors are becoming a mainstream part of investment decision-making. There are increasing calls for companies to provide high-quality, globally comparable information on sustainability-related risks and opportunities, as indicated by feedback from many consultations with market participants.
Developments in ESG include SFDR and IFRS, both make it even more important for companies to invest and focus on ESG.
SFDR is a set of EU regulations that require asset managers and other financial market participants to publicly disclose ESG information around their investment decisions and financial products, whether or not they are listed as sustainable.
IFRS is the International Sustainability Standards Board. This foundation is a not-for-profit, public interest organisation established to develop enforceable and globally accepted accounting and sustainability disclosure standards.
IFRS Releases Global Sustainability and Climate Reporting Standards for companies to adhere to. The new standards began applying for annual reporting periods in January 2024, with companies beginning to issue disclosures against the standards in 2025.
92% of investors agreed that ESG data is important for assessing companies’ long-term financial outlook, and 88% said that ESG data should be treated with the same rigor as financial data.
There is clear pressure from investors and governing bodies put on FM's to show their commitment to ESG, with it being an important time as new standards have been placed on industries.
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