Key takeaways:
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ESG criteria (Environmental, Social, Governance) evaluate a company beyond its financial performance
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They fall under 3 pillars: environmental impact, social relations, quality of governance
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Good ESG performance facilitates access to financing, reduces risks, and strengthens competitiveness
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The approach is structured into 6 steps, from the initial diagnostic to extra-financial reporting
- Even without a legal obligation, structuring your ESG strategy becomes a real lever of trust with banks, clients, and investors
ESG criteria
have gradually established themselves as a benchmark for evaluating a company beyond its financial performance. But what exactly do they cover, where do they come from, and how should you structure your approach? Here is what you need to know before going further.
ESG: definition and origin of extra-financial criteria
The ESG acronym stands for three dimensions: Environmental, Social, and Governance
. These criteria measure a company’s performance beyond its sole financial results. They are referred to as “extra-financial” criteria.
The French Financial Markets Authority (AMF), the French regulator, defines them as a tool to evaluate an economic actor outside the usual financial criteria, such as profitability or growth prospects
. In other words, ESG criteria assess the real impact of an activity on its environment and on society.
This approach is not new. The concept of “triple bottom line” emerged as early as 1994. The term ESG itself was popularized in 2004 by a United Nations report. It was then built upon the Principles for Responsible Investment, formalized in 2006. The definition of ESG criteria was thus developed at the intersection of finance and sustainable development.
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Useful clarification: ESG criteria should not be confused with CSR. CSR, or Corporate Social Responsibility, refers to the voluntary actions taken by the organization. ESG criteria serve to measure and evaluate these commitments objectively.
What are the 3 pillars of ESG criteria?
The question often arises: what are the ESG criteria in concrete terms? They are divided into three major pillars, each gathering precise indicators. The following table provides a clear reading of them.
| Pilier | Ce qu'il évalue | Exemples d'indicateurs |
|---|---|---|
| Environnemental (E) | L'impact de l'entreprise sur la planète | Émissions de gaz à effet de serre, consommation d'énergie, gestion des déchets, empreinte carbone, ressources naturelles |
| Social (S) | Les relations avec les parties prenantes | Conditions de travail, diversité et inclusion, santé et sécurité des salariés, respect des droits humains |
| Gouvernance (G) | Le pilotage et l'éthique de l'entreprise | Transparence, rémunération des dirigeants, lutte contre la corruption, composition du conseil d'administration |
These three pillars are complementary. A company that performs well on the environmental front, but is opaque in its governance, will receive an unbalanced ESG score.
The analysis therefore combines all three dimensions to draw a global and faithful picture.
To objectify this evaluation, extra-financial rating agencies assign an ESG score. They analyze published reports, available data, and the concrete practices of each company, pillar by pillar.
Why are ESG criteria important for your company?
Integrating ESG criteria goes far beyond simple compliance. Indeed, it is a tangible performance lever:
- Financing : good ESG performance facilitates access to financing. Investors and banks now scrutinize these indicators before committing their funds.
- Strengthening risk management : anticipating a regulatory, environmental, or social risk protects the continuity of your business. A polluting company exposes itself to penalties, and faulty governance can block access to public contracts.
- Competitiveness : the benefits are also commercial and human. A credible approach enhances your brand image, reassures your customers, and attracts talent, particularly younger generations.
Is your ESG strategy ready to convince?
How to structure your ESG approach?
Conduct an initial diagnostic
- Step 1
Before acting, draw up an honest assessment of your current practices.
Review your three pillars: environmental, social, and governance. This starting point reveals your strengths, as well as your blind spots. It prevents building a strategy on hunches rather than facts.
Conduct the materiality analysis
- Step 2
Not all ESG topics carry the same weight depending on your sector. The materiality analysis identifies the issues that are truly priority areas for your business. Regulations speak of “double materiality”: the impact of your activities on society and the effect of sustainability issues on your finances.
At this stage, consult your stakeholders: employees, customers, suppliers, and investors
. Their expectations refine your priorities and strengthen internal buy-in.
Defining indicators and objectives
- Step 3
Each priority issue must correspond to a measurable indicator. Next, set quantified and dated targets, for example a specific reduction in your carbon footprint.
Without a clear target, it is impossible to measure your progress or highlight it.
This step translates your ambition into a concrete roadmap.
Collect and ensure data reliability
- Step 4
Data quality dictates the entire credibility of your reporting.
Centralize your information and rigorously document every source.
This traceability protects you during an external audit. It also reduces the risk of being accused of misleading communication, or greenwashing.
Formalize extra-financial reporting
- Step 5
Gather your results into a clear, transparent, and structured report
. For companies subject to the CSRD, this sustainability report follows ESRS standards and undergoes independent verification. For others, a voluntary, streamlined format is enough to highlight your efforts to banks and prime contractors.
At this stage, consult your stakeholders: employees, customers, suppliers, and investors
. Their expectations refine your priorities and strengthen internal buy-in.
Steer and continuously improve your ESG approach
- Step 6
An ESG approach is not a one-off exercise, but a living process.
Regularly monitor your indicators, adjust your action plan, and communicate your progress.
This continuous improvement builds stakeholder trust. It gradually transforms a regulatory constraint into a sustainable competitive advantage.
Why seek support to deploy an ESG strategy?
Structuring such an approach requires methodology and an external perspective:
- A rigorous compliance firm helps you map your risks and ensure the reliability of your extra-financial reporting.
- Corporate governance experts strengthen the transparency of your governing bodies and secure your decision-making processes.
By relying on Eterra’s expertise, you bring together three complementary skill sets: governance, compliance, and European funding. The firm supports SMEs and mid-caps at every stage, from the initial diagnostic to final reporting.
By treating ESG criteria as a strategic project rather than a simple administrative obligation, you ensure the long-term sustainability of your business model. You gain transparency, competitiveness, and peace of mind. That is the true value of expert, operational support designed to let you focus on your growth.
YOUR QUESTIONS
FAQ - ESG Criteria for Companies
Before contacting us, you may have these questions. Here are direct answers from our senior consultants.
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Are ESG criteria mandatory for all companies?
ESG criteria do not create the same obligation for every company, as regulation mainly depends on size, status, and the target market. Large companies subject to the CSRD follow a precise reporting framework. A non-subject SME still has every interest in structuring its ESG approach, since banks, clients, investors, and prime contractors are already requesting extra-financial information.
How can greenwashing be avoided in an ESG approach?
A credible ESG approach relies on evidence, traceable figures, and transparent communication. Link every commitment to an indicator, a timeframe, a calculation method, and an internal manager. Avoid vague promises like “green company” or “positive impact” without verifiable data, as this type of messaging weakens your image and your compliance.
What is the difference between an ESG score, an ESG rating, and an SRI label?
The ESG score, ESG rating, and SRI label refer to three different tools of responsible evaluation. A score or rating measures a company’s or fund’s environmental, social, and governance performance according to each agency’s proprietary methodology. The SRI label applies to an investment product and verifies that ESG criteria are taken into account in financial management.
Do ESG criteria also serve banks and investors?
ESG criteria already guide the decisions of banks, investors, and investment funds. They help assess financial risk, governance strength, regulatory exposure, and a company’s ability to remain sustainable in its market. For you, strong ESG performance builds trust, supports access to financing, and carries weight in socially responsible investing (SRI).
