ESG is a set of
socially and environmentally responsible standards that are adopted by
institutions to encourage sustainable and socially responsible practices.
Globally, there is a shift in Investors’ behavior where they assess investments
considering non-financial factors. ESG stands for Environmental, Social &
Governance, a 3-way compliance ensuring sustainable development of business.
These three
elements are the key factors for investors to measure the sustainability and
societal impact of the companies’ activities.
MSX identifies
its market components conduct to be in line with the following;
Environmental
The responsible
dealing with environment to avoid depletion or degradation of natural resources
and the preservation of environment on the long run. This demonstrates the
company’s activities effects on the environment i.e. energy use, carbon
footprint, waste and pollution, consumption of depleting natural resources,
clean energy initiatives, recycling, and other initiatives to adopt more green
and sustainable activities i.e. Net zero initiatives, changing to renewable
energy, etc.
Social
The responsible
social activities by the company to protect the social welfare of employees,
workers, suppliers, and the community it operates and thrives in. This includes
diversity and inclusivity practices that align with the universal human rights
standards, and principles of fair trading and ethical financial practices , in
addition to the company’s contributions to developing the local communities, these
include practices such as Health/Safety & Wellness, Working conditions,
Employee Benefits, Diversity and Inclusion, Human Rights, local community
impact. Etc.
Governance
This refers to
the mechanisms and process by which the company is managed (the structure and
the composition of the company’s board of directors’ members and their
independence, and the legality of its activities) this is assessed to view the
alignment of leaderships’ vision to stakeholders, and to assess the
transparency, accountability, and legality of the company.