By: Ava Sobel
While browsing the web for a pair of the classic Nike Air Force One’s, you may come across an article about recycling on Nike’s website. Nike, the largest footwear and apparel company in the world, developed their “Move to Zero” mission in 2019. They not only developed sustainable practices, but also encouraged their consumers to take action as well. You may ask yourself, “Why is Nike doing this?”
Well, this is actually a part of Nike’s ESG plan.
What is ESG?
ESG stands for environmental, social and governance. These are factors that investors consider before choosing to invest in a particular company. Each company contains their own ESG policy with the hopes of attracting investors, improving financial performance, building customer loyalty, and attracting employees. Companies receive ESG scores, where they are evaluated on a series of ESG factors.
The environmental aspect of ESG regards how businesses or corporations respond to environmental issues. Some of these environmental issues include climate change, resource depletion, and animal treatment. An example of a company’s response to environmental issues is Nike’s “Move to Zero Mission”, as Nike vouches to minimize their carbon and waste emissions.
The social aspect of ESG regards the management of human capital, animals, communities, and clients. Some examples of this is how corporations and businesses respond to human rights, working conditions, and child labor. This plays a critical role in ESG investing, as companies that are ethically and socially conscious are valued highly among investors. For example, having a workforce with diversity and inclusion is a common way to gain the support of investors and receive high ESG scores.
The governance aspect of ESG regards the legal and ethical management of a company or a corporation. The transparency and accuracy of a companies’ accounting methods is particularly evaluated. Corruption and bribery are also important factors to investors when ensuring that the practices of these businesses are completely ethical.
So the next time you’re browsing Starbucks to order your cappuccino, check out what Starbucks is doing to help the planet and community!