The ESG principle is divided into three pillars in terms of energy concern
ENVIRONMENT
The environmental pillar of ESG is concerned with a company's environmental impact, which includes issues such as CO2 emissions, overall carbon footprint, water usage, pollution, and waste management processes. Moreover, energy and environmental issues are inextricably connected because it is extremely difficult to generate, distribute, or consume energy without bringing a major adverse effect on the environment. There are several environmental issues that are directly linked to the production and consumption of energy, which involve airborne pollutants, global warming, water contamination, heat pollution, and hazardous material disposal. The main cause of urban air pollution is the discharge of contaminants into the atmosphere from the combustion of fossil fuels.
SOCIAL
The effects of energy on society are both positive and negative. Humans benefit from plentiful, affordable, secure, safe, and clean energy. Energy extraction, transportation, and use, on the other hand, can have a negative impact on a society's health, environment, and economy. Additionally, relying on imported energy can jeopardise a country's security. Energy decisions have different consequences for different people. Underprivileged or marginalized communities are more likely to suffer the negative consequences of energy decisions because they have a lower capacity for adaptation and may lack bargaining power when compared to those with greater incomes. As a consequence, vulnerable populations can gain a lot from improvements in energy accessibility, safety, or affordability. These issues further highlight the underlying problem of the world's dependency on an infinite amount of fossil fuels. As demand rises and supply falls scarce, the problem becomes more serious, with possibly harmful social and economic. A massive transition away from fossil energy poses a significant challenge to society.
GOVERNANCE
The third pillar focuses on a company's internal operations, including meeting stakeholder needs, making political contributions, enforcing policies, hiring practices, adhering to laws and standards, and being transparent with the public. Governance refers to any of the numerous processes by which a group of people establishes and enforces the rules necessary for that group to achieve its goals. International energy markets are clearly suffering from a lack of adequate governance. National government policies on both the supply and demand sides distort price signals in these markets. Investment in future energy supply is frequently insufficient and does not serve the public interest, resulting in extreme price volatility. Because national governments regard energy services as critical to national security and power, they intervene in the sector to promote energy "independence" or, at the very least, to ensure supply [1] Reference: [1] Florini, Ann, and Benjamin K. Sovacool. "Who governs energy? The challenges facing global energy governance." Energy policy 37, no. 12 (2009): 5239-5248.
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MSCA 2023 I VOL.5
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