ESG Issues and Metrics

 ESG stands for Environmental, Social, and Governance. 

It's a framework used by investors to evaluate a company's performance beyond traditional financial metrics. 

Environmental factors assess how a company manages its impact on nature, such as carbon emissions and waste. 

Social factors look at a company's relationships with employees, suppliers, and communities. 

Governance examines a company's leadership, internal controls, and shareholder rights. Essentially, ESG helps identify sustainable and ethical companies.

---

Category	ESG Issue	Definition	Evaluation Metrics
Environmental (E)	Climate Change	Management level of carbon emissions.	Greenhouse gas management system, carbon emissions, energy consumption.
	Energy & Water Use	Level of energy and water conservation.	Direct/indirect energy consumption, energy intensity, total water consumption.
	Clean Production	Management level of environmentally harmful substance emissions.	Clean production management system, amount of water/chemicals used, emissions of chemicals/air pollutants/waste.
	Eco-friendly Products	Level of effort in developing environmentally friendly products.	Eco-friendly product development goals and processes, green patents, eco-friendly certifications, product environmental improvements, use of renewable energy.
Social (S)	Human Resources	Management level of working environment, human rights, and diversity.	Wages, benefits, employment, organizational culture, length of service, human rights, labor practices, hiring of youth interns, parental leave usage.
	Industrial Safety	Level of workplace safety management.	Health and safety system, external certification of safety and health management system, designation as a high-accident worksite.
	Subcontracting	Level of fair and reasonable management of partner companies.	Partner selection process, fair trade compliance program, support activities for partner companies, compliance with subcontracting laws.
	Product Safety	Level of product safety management.	Product safety system, product safety management system certification, occurrence of product-related safety accidents.
	Information Security	Management of personal information protection.	Incidents of personal information protection violations.
	Fair Competition	Level of effort for fair competition and social development.	Installation of internal transaction (or CSR) committee, anti-competitive behavior, consumer protection, social development, information security system, donations.
Governance (G)	Shareholder Rights	Level of effort to protect and communicate with shareholders.	Management protection mechanisms, shareholder opinion collection mechanisms, disclosure of general shareholder meetings.
	Board Composition & Activities	Level of board independence and diligence.	Separation of CEO/Board Chair, independence of board structure, proportion of outside directors, establishment and composition of compensation committee, director compensation policy, number of women on the board.
	Auditing System	Level of auditor independence.	Proportion of audit committee and outside directors, proportion of long-serving auditors, ratio of non-audit services to audit services, occurrence and disclosure of internal misconduct.
	Affiliate Risk	Level of risk from affiliate company failures.	Proportion of affiliate contingent liabilities, proportion of affiliate sales (purchase) transactions.
	Dividends	Level of effort to return value to shareholders through dividends.	Basis for interim/quarterly dividends, Total Shareholder Return (TSR), dividend payment history over the last 3 years, history of under-distributing dividends.