Name: Everything you need to know about ESG in under five minutes
Uploaded: 2023-02-06T16:46:05.898Z
Duration: 306.87
Description: Conversations about environmental, social and governance issues are everywhere, from news articles to business meetings. But do you really understand the ESG acronym and the meaning behind each letter? In this short explainer, ESG strategist Cara Williams tells us everything is there to know about ESG factors and demonstrates how they are used to build business and investment strategies.

MIMS Explaining ESG V2.mp4

MIMS Explaining ESG V2.vtt

English

{{00:00:00}}
Hi, I'm Cara Williams and I'm global
head of ESG strategy for Mercer.

{{00:00:04}}
ESG is an acronym for environmental,
social and governance and

{{00:00:28}}
effectively really what the intention
there is to demand that firms,

{{00:00:33}}
corporations start to kind of up
their game across environmental,

{{00:00:36}}
social, and governance factors.

{{00:00:38}}
Within each letter, lots of complexity.

{{00:00:41}}
So environmental could be things
like climate change, net zero

{{00:00:44}}
journeys, biodiversity requirements.

{{00:00:47}}
Under social it's things like you
looking at your supply chain and

{{00:00:51}}
whether or not you're using child
labour and whether or not you're

{{00:00:54}}
looking after your employees.

{{00:00:56}}
Governance includes things like,
simply things like proxy voting when

{{00:01:00}}
it comes to engaging with the boards
of the corporates that you work with.

{{00:01:06}}
ESG is applied in
actually a number of ways.

{{00:01:10}}
I mean, as a corporation, effectively
what they're really trying to do is

{{00:01:15}}
look at their own impact on the planet
and try to mitigate those, identifying

{{00:01:22}}
the areas that they care about
and the areas that they think they

{{00:01:25}}
actually do have some control over.

{{00:01:26}}
So we see lots of people on
things like net zero journeys.

{{00:01:30}}
That's saying that by a certain
year they want to limit all of

{{00:01:33}}
their emissions in the future.

{{00:01:35}}
As far as social goes, it's really,
really interesting to see where

{{00:01:38}}
corporations have been focusing as
far as the social agenda goes, and

{{00:01:42}}
that's really ensuring that the
employees are well looked after,

{{00:01:46}}
that benefits are all inclusive, and
that they're ultimately focusing on a

{{00:01:51}}
strategy to make, again, life better
for either their employees or even

{{00:01:55}}
the communities that they operate in.

{{00:01:57}}
And then governance is really
about how the corporation functions

{{00:02:00}}
and again, whether or not they're
taking full responsibility in

{{00:02:04}}
their role on people and planet.

{{00:02:08}}
ESG has developed into
a pretty critical factor

{{00:02:15}}
as far as investments go.

{{00:02:16}}
So most asset managers now do
incorporate ESG as an investment

{{00:02:21}}
factor to take into consideration.

{{00:02:23}}
So just like when somebody looks at
price to book ratio as being an input

{{00:02:28}}
in their decision making process.

{{00:02:30}}
ESG serves as a really good means to
assess whether or not a company is

{{00:02:34}}
going to benefit or potentially get
penalised by upcoming regulation.

{{00:02:39}}
Across the environment piece,
or even the social piece, and

{{00:02:42}}
especially on the governance side.

{{00:02:44}}
So you want to see asset
managers that are engaging

{{00:02:46}}
with those corporations, right?

{{00:02:48}}
So, it's forced corporations to listen
to investors, and it's enforcing

{{00:02:54}}
investors to pay attention to
what their corporations are doing.

{{00:02:56}}
It's no longer just about profit.

{{00:03:03}}
The main issue is that there is no
standard of reporting across all

{{00:03:07}}
three factors, the environment,
the social and the governance.

{{00:03:10}}
There's emerging regulation and
there's emerging standards that are

{{00:03:15}}
coming out on a pretty regular basis,
particularly on the environmental side.

{{00:03:20}}
Social hasn't really come up with
any kind of standards thus far,

{{00:03:24}}
so it makes it very difficult for
corporations to report clearly.

{{00:03:29}}
And you know, where I think investors
may, and shareholders and even

{{00:03:32}}
employees may, have concerns about
transparency, oftentimes it's actually

{{00:03:36}}
not a lack of transparency, it's a
lack of understanding how best to

{{00:03:40}}
report out on these factors where
a company may actually be making

{{00:03:43}}
a lot of progress, but they don't
have any kind of set benchmarks

{{00:03:47}}
that they can be measured against.

{{00:03:52}}
So given the emergence and the
importance of ESG, it's absolutely

{{00:03:56}}
become an additional burden, if you
will, responsibility on corporations.

{{00:04:00}}
It's an entirely new set of
reporting that's required, but

{{00:04:04}}
more importantly, I think it's
setting a new strategy and agenda.

{{00:04:08}}
What is it that they
want to be known for?

{{00:04:11}}
Where do they want to
actually make an impact?

{{00:04:13}}
Be it across environmental,
social, or the governance piece.

{{00:04:17}}
How are they potentially
impacting positively their

{{00:04:19}}
communities that they operate
in, the planet as well as people?

{{00:04:23}}
When I refer to people, it's their own
employees as well as shareholders, and

{{00:04:27}}
the communities at large they operate
in and even communities farther afield.

{{00:04:31}}
So there's a lot more
responsibility on corporations

{{00:04:34}}
to establish their strategy,
measure themselves accordingly.

{{00:04:38}}
And, you know, there are
challenges on that reporting piece.

{{00:04:41}}
And, ultimately making sure that
they continue to hit the various

{{00:04:47}}
points in time across where they
want to ultimately get to, and

{{00:04:50}}
that they can communicate it
clearly, openly and transparently

{{00:04:53}}
when they, effectively- you have
a shortfall and don't necessarily

{{00:04:57}}
meet the requirements,  that they're
open and authentic about that.

Hi, I'm Cara Williams and I'm global
head of ESG strategy for Mercer.

ESG is an acronym for environmental,
social and governance and

effectively really what the intention
there is to demand that firms,

corporations start to kind of up
their game across environmental,

So environmental could be things
like climate change, net zero

Under social it's things like you
looking at your supply chain and

whether or not you're using child
labour and whether or not you're

Governance includes things like,
simply things like proxy voting when

it comes to engaging with the boards
of the corporates that you work with.

ESG is applied in
actually a number of ways.

I mean, as a corporation, effectively
what they're really trying to do is

look at their own impact on the planet
and try to mitigate those, identifying

the areas that they care about
and the areas that they think they

So we see lots of people on
things like net zero journeys.

That's saying that by a certain
year they want to limit all of

As far as social goes, it's really,
really interesting to see where

corporations have been focusing as
far as the social agenda goes, and

that's really ensuring that the
employees are well looked after,

that benefits are all inclusive, and
that they're ultimately focusing on a

strategy to make, again, life better
for either their employees or even

And then governance is really
about how the corporation functions

and again, whether or not they're
taking full responsibility in

ESG has developed into
a pretty critical factor

So most asset managers now do
incorporate ESG as an investment

So just like when somebody looks at
price to book ratio as being an input

ESG serves as a really good means to
assess whether or not a company is

going to benefit or potentially get
penalised by upcoming regulation.

Across the environment piece,
or even the social piece, and

So you want to see asset
managers that are engaging

So, it's forced corporations to listen
to investors, and it's enforcing

investors to pay attention to
what their corporations are doing.

The main issue is that there is no
standard of reporting across all

three factors, the environment,
the social and the governance.

There's emerging regulation and
there's emerging standards that are

coming out on a pretty regular basis,
particularly on the environmental side.

Social hasn't really come up with
any kind of standards thus far,

so it makes it very difficult for
corporations to report clearly.

And you know, where I think investors
may, and shareholders and even

employees may, have concerns about
transparency, oftentimes it's actually

not a lack of transparency, it's a
lack of understanding how best to

report out on these factors where
a company may actually be making

a lot of progress, but they don't
have any kind of set benchmarks

So given the emergence and the
importance of ESG, it's absolutely

become an additional burden, if you
will, responsibility on corporations.

It's an entirely new set of
reporting that's required, but

more importantly, I think it's
setting a new strategy and agenda.

What is it that they
want to be known for?

Where do they want to
actually make an impact?

Be it across environmental,
social, or the governance piece.

How are they potentially
impacting positively their

communities that they operate
in, the planet as well as people?

When I refer to people, it's their own
employees as well as shareholders, and

the communities at large they operate
in and even communities farther afield.

So there's a lot more
responsibility on corporations

to establish their strategy,
measure themselves accordingly.

And, you know, there are
challenges on that reporting piece.

And, ultimately making sure that
they continue to hit the various

points in time across where they
want to ultimately get to, and

that they can communicate it
clearly, openly and transparently

when they, effectively- you have
a shortfall and don't necessarily

meet the requirements,  that they're
open and authentic about that.

Make it Make Sense

Explainer

Conversations about environmental, social and governance issues are everywhere, from news articles to business meetings. But do you really understand the ESG acronym and the meaning behind each letter?

In this short explainer, ESG strategist Cara Williams tells us everything is there to know about ESG factors and demonstrates how they are used to build business and investment strategies.

acronym

Environmental

Social

Governance

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thumbnail_Cara-Williams-103d22edea1726b3f61bc8e05e0268aa.jpg

xsmall_Cara-Williams-103d22edea1726b3f61bc8e05e0268aa.jpg

Cara-Williams-103d22edea1726b3f61bc8e05e0268aa.jpg

Cara Williams

Global ESG Strategy Lead, Wealth Management and Multinational Client Lead for Wealth

What do Environmental, Social, and Governance stand for? Discover.

ESG meaning

Learn the ways corporations consider each letter of the acronym in their strategy.

ESG main uses

Understand how ESG influences the job of asset managers to access potential benefits or threats of an investment.

ESG as an investment factor

Emerging regulations and standards are coming out, but they are still insufficient. Understand why.

Lack of ESG standards

ESG should not be just an additional burden for corporations. See what Williams thinks about the future of ESG reporting.