ESG
A framework for evaluating Environmental, Social, and Governance factors in business and investment decisions. ESG has become widely used in finance, but also increasingly criticised for lack of consistency and greenwashing risks.
Environmental, Social, and Governance
ESG is a broad framework used by investors, companies, and regulators to assess the sustainability and ethical impact of business practices. It focuses on three dimensions: environmental (climate, biodiversity, resource use), social (labour rights, diversity, community), and governance (board structure, transparency, executive pay).
While influential in steering capital towards sustainability-linked investments, ESG has been criticised for weak definitions, inconsistent metrics, and enabling reputational “greenwashing.” The term is politicised in some regions, but still plays a role in shaping disclosure standards and investor reporting globally.
|
Type |
Jurisdiction |
Sector Relevance |
|---|---|---|
|
Framework / Investment Criteria |
Global |
Finance, Corporates, Investors, Regulators |
Established / Active Since
Early 2000s (gained prominence after UN Principles for Responsible Investment launch in 2006).
Maintained By / Organised By
Not formally governed. Adopted across financial markets, asset managers, regulators, and corporations.
Official Resources
N/A (widely adopted concept without a central governing body).
Relationship to Lemu
Lemu believes we need more tools, not fewer, in the challenge to make nature visible in business. Our Nature Intelligence provides science-based data that can strengthen the “E” dimension with verifiable biodiversity and ecosystem indicators, tackling ESG’s biggest weakness — lack of scientifically verifiable claims.
Examples in Practice
Cross-Mapping with Other Frameworks
- TNFD — Provides a science-based, globally recognised framework for integrating nature dependencies, impacts, risks, and opportunities into business and finance decisions. Unlike ESG, it has defined disclosure recommendations and is rapidly becoming a baseline for regulators and investors.
- SBTN — Establishes measurable, science-based targets for companies and cities across climate, freshwater, land, ocean, and biodiversity. It addresses ESG’s vagueness by requiring quantifiable commitments aligned with planetary boundaries.
- GBF — A UN-agreed global framework with specific targets for halting and reversing biodiversity loss by 2030. It provides a clear reference for businesses and governments to go beyond generic ESG reporting and align with measurable biodiversity outcomes.