2 ESG Management

ESG Definition

Environmental, Social and Governance (ESG) management is the ability to identify factors that determine whether an organization is performing well or poorly in terms of ESG. Therefore, banks need to finalize the list of factors they will assess before evaluating their corporate borrowers. Regulatory bodies generally recommend that companies conduct ESG parametrization across two main dimensions: Country/Region and Sector/Industry.

Banks should identify the parameters and establish benchmarks for each factor within a specific region or sector. Banks can implement measures for data or responses that do not meet the benchmarks, using these definitions. These measures may include covenants, terms and conditions, or adjustments to pricing, such as processing fees and charges.