What role does Governance play in ESG factors?

Governance in the context of ESG (Environmental, Social, and Governance) factors pertains to how a company is directed and controlled, emphasizing the importance of a well-structured and accountable board of directors. Good governance involves assessing the roles and responsibilities of the board, ensuring transparency, and upholding ethical standards and compliance with laws and regulations.

Boards that are effectively structured and accountable are crucial for fostering trust with stakeholders, making informed decisions, and implementing policies that align with long-term sustainability goals. Governance looks at issues such as board composition, diversity, independence, and executive compensation, all of which play a vital role in a company's strategic direction and risk management.

By focusing on these elements, governance contributes significantly to a company's overall performance and reputation, ultimately impacting its ability to attract investors and thrive in a competitive landscape. This aligns with the principle that strong governance practices are essential to achieving positive environmental and social outcomes, thereby completing the broader ESG framework.