Sustainability and ESG

The topics of sustainability and resource conservation are on everyone’s lips, and with them the keyword “ESG” more and more frequently.

ESG describes the voluntary contribution of business to sustainable development in the environmental, social and corporate governance areas. The term “voluntary” is used because the contribution made goes beyond the legal requirements. Companies implement social and environmental concerns in their corporate strategy and also communicate these with the various stakeholders. The main aim is to act as a company in such a way that future generations can also find a world worth living in. At the same time, ESG also follows the logic that sustainable and socially responsible corporate management reduces a company’s own costs in the long term and thus contributes to the positive development of its own economic activities.

The E stands for environment. In concrete terms, it is a question of what contribution the company in question is making to achieving the climate targets and the sustainability goals of the United Nations. Important indicators are, for example, CO2 emissions, share of renewable energies, environmental management or compliance with environmental guidelines.

The S stands for Social. Companies commit to acting in an ethically responsible and socially responsible manner. The long-term goal is to contribute to long-term positive social development through their own corporate management. The focus is on aspects such as compliance with core labor rights, high standards of occupational health and safety, fair conditions in the workplace, appropriate remuneration, and training and development opportunities for employees.

The G stands for governance and can be translated as the way the company is managed. This is about ethical and sustainable corporate governance characterized by transparency and openness. The aim is, for example, to avoid corruption or to anchor sustainability management at executive and supervisory board level.

With the taxonomy set of rules, the EU Commission sets standards for ecological management. This classification tool is about classifying certain activities of companies according to their contribution to a sustainable future and thus making them comparable.  Investors should be able to use these guidelines to assess whether a company in which they want to invest is operating sustainably. An EU Commission has defined clear criteria for this with very precise metrics.

Sustainability criteria are playing an increasingly important role for investors. In the course of this, ESG criteria are being included in the analysis of securities and so-called ESG products such as sustainable funds are emerging. Not only banks and investors are involved in the development of these, but also rating agencies, analysts or organizations that are not sponsored by governments.

The issue of ESG is also playing an increasingly important role in the construction and real estate industry. Buildings consume 42 percent of all electricity worldwide and generate one-third of all greenhouse gas emissions. Siemens offers a range of data-based services that can help reduce energy consumption in buildings by up to 30 percent. The data collected and analyzed also helps prevent potential equipment failure. This can significantly reduce the risk of a breakdown. The central cloud platform is the Siemens Navigator, which provides comprehensive insights into the various areas of building performance.