...in addition, the social dimension – e.g. the treatment of employees and the observance of human rights – as well as the principles of sustainable corporate governance – e.g. the management of corruption risks.
The United Nations, together with investors, has established six principles for how ESG criteria should be incorporated into the investment process. The investor organizations that sign these "Principles for Responsible Investment" (PRI) commit to working toward and reporting on the inclusion of these criteria in the investment process.
This criterion considers the extent to which a company pollutes the environment, emits greenhouse gases or pollutants, consumes resources, or uses energy efficiently. Climate risks, in particular, are gaining importance here:
Climate change is not only an environmental problem but also an economic threat. It could "endanger hundreds of millions of human lives, trillions of dollars in economic power, and the world's physical and natural capital," predicts a 2020 McKinsey study.
The current risk report of the World Economic Forum in Davos (WEF) assigns the three biggest global risks for the next ten years to the environmental sector:
Climate protection failure
extreme weather events and biodiversity loss.
The high priority given to these problems could increase the importance of those financial market players who contribute to solving the challenges.
Areas that are analyzed under Environment, for example:
Strategies and plans to mitigate climate change
Strategies and plans for adaptation to climate change
CO₂ reduction towards CO₂ neutrality
Use of renewable energies such as wind power or solar
Improving energy management for greater energy efficiency
Protection of natural resources along the entire value chain: reduction, efficiency, recycling
Use of sustainable products, technologies and infrastructures
Holistic building management (ecological use of materials, energy, water, air)
Contributions to air pollution control
Comprehensive water management:
Savings, reuse, environmentally friendly wastewater treatment
Transition to sustainable mobility, logistics optimization
Protection of biodiversity