ESG: A Comprehensive Guide to the Main Principles [2026]

Environmental, Social and Governance (ESG) has moved from a niche topic to a mainstream business priority. Regulators, investors, customers and employees now expect organisations of all sizes, including SMEs, to show how they manage their impact on people and planet, not just profit.

This guide explains what ESG principles are, why they matter, and how to apply them in everyday business. It is written in clear, simple language for general readers, business stakeholders and SMEs, while still going into enough depth for decision‑makers.

1. What Are ESG Principles?

At the core, ESG principles are the values and rules that guide how a company behaves in three key areas:

• Environmental – how the organisation affects the natural world (emissions, energy, waste, water, biodiversity).
• Social – how it treats people (employees, communities, customers, suppliers, human rights).
• Governance – how the organisation is run (board structure, ethics, transparency, risk management, compliance).

When people ask “what are ESG principles?”, they usually refer to the standards, commitments and behaviours that help a business:

• Reduce environmental harm.
• Protect and support people.
• Operate with strong, transparent governance.

These principles of ESG and sustainability for business are not only about doing the “right thing”. They are also about managing risk, meeting regulations, attracting investment and building long‑term value.

For a simple starter overview, readers can explore What is Environmental, Social, and Governance (ESG)? and A Simple Guide to ESG Criteria for Beginners.

2. The Evolution of ESG

ESG did not appear overnight. It has evolved over several decades:

CSR (Corporate Social Responsibility)

In the 1990s and early 2000s, many companies focused on CSR – donations, community projects, and volunteer work. CSR was often separate from the core strategy.

Responsible and ethical investing

Investors started to avoid sectors like tobacco, weapons and gambling (negative screening), building the first wave of socially responsible investment funds.

The birth of “ESG”

In 2006, the Principles for Responsible Investment (PRI) – In 2006, the UN‑supported Principles for Responsible Investment (PRI) were launched, bringing ESG into the language of mainstream finance. The PRI helped investors see sustainability as a set of measurable factors that affect financial performance, not just a moral issue.

Standardisation and regulation

Since 2010, global sustainable investment has grown to tens of trillions of dollars, representing more than one‑third of professionally managed assets in major markets. At the same time, regulators have introduced new reporting rules such as the EU’s Corporate Sustainability Reporting Directive (CSRD) and emerging standards under ISSB and ESRS.

ESG in Asia and for SMEs

In Asia, ESG regulation and investor demand are rising fast. SMEs are increasingly asked by large clients and banks to show ESG performance, even when they are not yet directly regulated.

Elite Asia documents this shift across the region in resources such as Navigating ESG Excellence: Insights from Elite Asia’s 2024 ESG Seminar and Empowering Modern Businesses Through Effective ESG Solutions.

The message is clear: ESG is now part of mainstream business and investment, not a side project.

3. The Three Pillars of ESG

Most frameworks agree that ESG is built on three pillars: Environmental, Social and Governance.

3.1 Environmental

The environmental pillar focuses on how your operations affect nature and climate, including:

• Greenhouse gas emissions and energy use.
• Waste, recycling and circularity.
• Water use and pollution.
• Land use, biodiversity and resource extraction.

For SMEs, this may mean:

• Reducing energy consumption and switching to renewables.
• Cutting waste and improving recycling.
• Managing suppliers for lower environmental impact.

Elite Asia’s own practices and inaugural ESG Report FY 2024 show how environmental actions can be tracked and reported practically.​

3.2 Social

The social pillar looks at relationships with people and society:

• Worker health, safety and well-being.
• Labour conditions and fair pay.
• Diversity, equity and inclusion.
• Customer safety and product responsibility.
• Community impact and human rights in the value chain.

The social pillar overlaps with traditional HR and community engagement, but ESG requires more precise metrics and reporting.

3.3 Governance

Governance covers leadership and how decisions are made:

• Board structure, independence and diversity.
• Anti‑corruption, ethics and whistle‑blowing.
• Internal controls and risk management.
• Data protection and cybersecurity.
• Tax transparency and compliance.

Good governance supports the other two pillars by ensuring ESG issues are properly overseen and integrated into strategy.

For a more practical breakdown of how these three pillars support brand building, see ESG Marketing: Embracing Sustainability for Brand Success and Sustainable Marketing: ESG Communication Insight for Effective Communication on Your Website.

4. EHS, Corporate Sustainability and CSR: How They Relate to ESG

4.1 EHS (Environment, Health and Safety)

EHS (Environment, Health and Safety) focuses on operational compliance: pollution controls, workplace safety, and health protection for staff.

• EHS is usually site‑level and regulatory: are factories safe, emissions legal, and workers protected?
• ESG is broader and more strategic: it includes EHS topics. Still, it adds investor expectations, governance, social impact and long‑term sustainability goals.

In practice, strong EHS data on incidents, emissions and compliance often becomes the foundation for credible ESG reporting.

4.2 Corporate Sustainability and CSR

• CSR deals with a company’s social and environmental responsibility, often through projects and philanthropy.
• Corporate sustainability is about building a resilient business model that can survive and thrive over the long term, considering environmental and social limits.

ESG brings these ideas together with finance:

• It connects sustainability performance with risk, cost of capital, and access to markets.
• It turns CSR promises into measurable indicators, targets and reports.

5. The Six Principles of ESG for Responsible Investment (UN PRI)

When people refer to “UN ESG principles”, they often mean the UN‑supported Principles for Responsible Investment (UN PRI). These are six ESG investing principles that guide institutional investors on how to integrate ESG into their decisions.

The six Principles of ESG for responsible investment are:

1. Incorporate ESG issues into investment analysis and decision‑making.
2. Be active owners and integrate ESG issues into ownership policies and practices.
3. Seek appropriate ESG disclosure from companies in which they invest.
4. Promote acceptance and implementation of the Principles within the investment industry.
5. Work together to enhance effectiveness in implementing the Principles.
6. Report on activities and progress in applying the Principles.

These ESG principles for responsible investment have been adopted by thousands of signatories worldwide, representing over US$100 trillion in assets. They show investors how to link ESG performance to long‑term risk and return.

For companies seeking capital, this means:

• Investors are more likely to ask for ESG data, policies and targets.
• Poor ESG performance can increase perceived risk and reduce attractiveness.
• Strong ESG disclosures support investor confidence and may improve access to sustainable finance.

Elite Asia explores these trends in ESG Investing: How Companies Can Benefit from the Sustainable Investment Trends.​

6. 16 Foundational Principles for ESG Reporting

A helpful way to understand ESG reporting principles is to look at two major UN initiatives:

The 10 Principles of the UN Global Compact

These cover four areas: human rights, labour, environment and anti‑corruption.​

• Support and respect internationally proclaimed human rights.
• Make sure the business is not complicit in human rights abuses.
• Uphold freedom of association and collective bargaining.
• Eliminate forced and compulsory labour.
• Abolish child labour.
• Eliminate discrimination in employment and occupation.
• Support a precautionary approach to environmental challenges.
• Promote greater ecological responsibility.
• Encourage environmentally friendly technologies.
• Work against corruption, including extortion and bribery.

The 6 Principles for Responsible Investment (PRI)

The six UN PRI principles described above extend ESG thinking into investment.

Together, these 16 foundational principles for ESG reporting give a strong base for what ESG disclosures should aim to show:

• Respect for people and human rights.
• Fair labour and equal opportunities.
• Environmental stewardship and climate action.
• Anti‑corruption and ethical conduct.
• Integration of ESG into investment and ownership decisions.
• Transparency and regular reporting on progress.

Elite Asia’s own commitment to recognised standards is reflected in being a Certified GRI Community Member and an Official GRESB Partner, detailed in GRI Certified: Elite Asia’s Commitment to Sustainability and Elite Asia Becomes GRESB Partner: Driving Real Estate Sustainability.

7. Why Are ESG Principles on the Rise?

Several powerful trends explain why ESG principles are gaining momentum:

• Climate risk and regulation – Climate change, biodiversity loss and pollution are now recognised as key financial and systemic risks. New laws (such as CSRD, ISSB standards and climate disclosure rules) require more ESG data from companies.
• Investor expectations – Global sustainable investment assets reached over US$35 trillion in major markets by 2020 and continue to grow, even as definitions tighten. Many institutional investors now include ESG in their standard analysis.
• Customer and employee pressure – Stakeholders increasingly prefer companies that act responsibly and transparently on sustainability issues.
• Supply chain requirements – Large companies often require their suppliers, including SMEs, to meet specific ESG standards to reduce risk in their value chain.
• Risk and resilience – Firms with strong ESG management tend to be better prepared for regulatory change, social unrest, and environmental shocks, improving long‑term resilience.

For SMEs, ESG is becoming a practical business issue: it affects bank lending, supplier contracts, export opportunities and even talent attraction.

8. ESG Principles and Corporate Values Alignment

For ESG to work, it must align with the company’s core mission. ESG principles and corporate values alignment mean:

• Choosing ESG priorities that fit your sector, strategy and stakeholder expectations.
• Turning high‑level values (e.g. “integrity”, “respect”) into concrete ESG policies and KPIs.
• Avoiding “greenwashing” – saying more than you can prove.

When ESG is tightly linked to corporate values:

• Employees understand why changes are happening.
• Leadership can explain decisions to investors and regulators.
• Customers see consistent behaviour across marketing, products and reporting.

Elite Asia covers this in articles such as 3 Critical Factors To Mind When Integrating ESG Principles and ESG Marketing: Embracing Sustainability for Brand Success.

9. How Can ESG Principles Be Applied in the Company?

9.1 Practical steps for ESG principles in business

Applying ESG principles in business can follow a simple path:

Assess material issues

Identify which environmental, social and governance topics matter most to your stakeholders and have the highest impact on your business.

Set policies and targets

Translate principles into clear policies (e.g. anti‑corruption, diversity, climate) and set measurable goals (e.g. emissions reduction, safety incidents, gender balance).

Integrate into operations

Build ESG into procurement, HR processes, product design, facility management and risk controls. In doing so, EHS data becomes an integral part of the broader ESG picture.

Train people

ESG cannot succeed without internal skills. Tailored corporate training on ESG principles helps teams understand frameworks like GRI, SASB, TCFD and ISSB, and how to apply them to daily work.

Measure and report

Collect data, prepare ESG or sustainability statements, and communicate progress clearly to stakeholders.

Elite Asia provides practical guidance on each stage through resources such as:

• Empowering Modern Businesses Through Effective ESG Solutions​
• Leveraging Digital Technology for ESG Reporting to Meet Carbon Regulations and Sustainability Goals​
• How to Make the ESG Reporting Process Less Painful​

9.2 The role of ESG specialists

A growing number of organisations appoint an ESG Specialist or sustainability manager. This role typically:

• Evaluates ESG risks and opportunities.
• Coordinates data collection and reporting.
• Aligns ESG strategy with business goals.
• Engages stakeholders and manages ratings and audits.

In smaller firms, these tasks may be shared between finance, HR, operations and compliance teams, supported by external advisers and training.

10. Compliance with ESG Principles as a Factor for Receiving Investments

Strong ESG performance now plays a clear role in access to capital:

• Studies show that ESG‑labelled or sustainable assets represent a growing share of global investment, often more than one‑third of total professionally managed assets.
• Surveys of institutional investors indicate that a large majority consider ESG factors when making decisions, and many are willing to pay a premium for strong ESG funds.
• Banks, export credit agencies and public finance institutions increasingly include ESG conditions in their lending criteria.

For SMEs, this means that:

• Good ESG compliance can support better credit terms and easier access to funding.
• Weak ESG management can become a barrier in due diligence for M&A, IPOs and long‑term partnerships.​

Elite Asia explores this link between ESG and investment attraction in ESG Investing: How Companies Can Benefit from the Sustainable Investment Trends.​

11. The Most Popular ESG Strategies and ESG Funds

Investors use several main ESG strategies to construct portfolios:

1. ESG integration – Systematically including ESG data in financial analysis and stock selection, currently, the largest strategy globally by assets.
2. Negative/exclusionary screening – Excluding sectors or companies that breach certain norms (e.g. tobacco, weapons, severe human rights violations).
3. Positive / best‑in‑class screening – Focusing on companies with stronger ESG performance relative to peers, even in high‑impact sectors.
4. Norms‑based screening – Aligning portfolios with international standards, such as the UN Global Compact or OECD guidelines.
5. Sustainability‑themed investing – Targeting themes like clean energy, green buildings or social inclusion.
6. Impact investing – Seeking measurable positive social or environmental impact alongside financial returns.
7. Corporate engagement and shareholder action – Using voting and dialogue to push companies to improve ESG performance.

ESG funds that apply these strategies have grown strongly, though flows can be volatile as regulations and political debates evolve. Over the long term, however, demand for transparent and sustainable products is still increasing.

12. ESG Reporting and Frameworks

12.1 Key ESG reporting frameworks

Companies today face a complex set of ESG reporting frameworks and standards, including:

• GRI (Global Reporting Initiative) – Broad, multi‑stakeholder sustainability reporting standard covering environmental, social and governance topics.
• SASB Standards (now under ISSB) – Industry‑specific standards focused on financially material ESG issues for investors.
• TCFD (Task Force on Climate‑related Financial Disclosures) – Framework for reporting climate‑related risks and opportunities.
• ISSB (IFRS S1 and S2) – Global baseline standards for sustainability reporting, integrating prior frameworks.
• CSRD / ESRS (EU) – Mandatory sustainability reporting standards for large and listed companies operating in the EU.
• Regional rules such as BRSR (India) and other local guidelines.

Each framework has its own emphasis, but most share similar reporting principles: materiality, completeness, accuracy, balance, clarity, comparability, timeliness and verifiability.

Elite Asia’s partnership status with GRI and GRESB, as detailed in GRI Certified: Elite Asia’s Commitment to Sustainability and Elite Asia Becomes GRESB Partner: Driving Real Estate Sustainability, reflects a strong alignment with leading frameworks and best practices.

12.2 The benefits and limits of ESG disclosures

Benefits:

• Improves transparency and builds trust with investors, regulators and communities.
• Helps management identify risks and opportunities.
• Supports better decision‑making and long‑term planning.
• Enables benchmarking against peers and standards.

Limits and challenges:

• Data quality and consistency – Collecting accurate ESG data across operations and supply chains can be difficult.
• Greenwashing risk – Some reports highlight achievements but hide negative impacts, reducing credibility.
• Framework overload – Many overlapping frameworks and evolving rules can overwhelm smaller firms.

Resources like How to Make the ESG Reporting Process Less Painful and Leveraging Digital Technology for ESG Reporting to Meet Carbon Regulations and Sustainability Goals show how digital tools and structured processes can simplify compliance.

Elite Asia also offers hands‑on training, including ESG Course: Report Creation – Environmental Section and ESG Course: Sustainability Statement Drafting, to help teams build reporting skills internally.

13. Challenges and Opportunities of ESG (Especially for SMEs)

13.1 Key challenges

For SMEs and mid‑sized companies, common ESG challenges include:

• Limited budget and staff for ESG work.
• Lack of internal expertise on frameworks and standards.
• Difficulty gathering data from suppliers and partners.
• Confusion about which regulations apply now, and which will apply later.

13.2 Opportunities

At the same time, ESG creates clear opportunities:

• Competitive advantage – Being ahead on ESG can win tenders, partnerships and procurement contracts.
• Cost savings – Energy efficiency, waste reduction and better risk management usually lower costs over time.
• Access to finance – Strong ESG performance can support better access to credit and investment.
• Reputation and talent – Responsible companies attract loyal customers and employees who care about purpose.

Elite Asia’s blogs and press releases, such as Empowering Modern Businesses Through Effective ESG Solutions and Elite Asia Becomes GRESB Partner: Driving Real Estate Sustainability, highlight how organisations can turn ESG pressures into a strategic advantage.

14. The Role of Training: Tailored Corporate Training on ESG Principles

Given the pace of change, many organisations now invest in tailored corporate training on ESG principles to build in‑house capability:

• Board and senior management training on ESG strategy and risk.
• Practical workshops on ESG reporting and frameworks (GRI, ISSB, TCFD, ESRS).
• Sector‑specific sessions on climate, human rights, or supply‑chain due diligence.

Elite Asia offers HRD Corp‑funded ESG training in Malaysia and regional programmes for ESG reporting, ESG rating systems, and sustainability statements, as described in:

• How to Convince Your Boss to Invest in ESG Training (and Get It Funded)​
• Comprehensive ESG Rating System Training​
• ESG Course: Report Creation – Environmental Section​

Such programmes help SMEs and larger corporates move from basic awareness to confident, consistent application of ESG principles.

15. Why ESG Matters – and the Future of ESG

15.1 Why ESG matters

In summary, ESG matters because it:

• Captures significant non‑financial risks and opportunities.
• Influences investor decisions and the cost of capital.
• Shapes how regulators treat sectors and companies.
• Affects brand reputation, customer loyalty and talent retention.

For SMEs and business stakeholders, embedding ESG principles today is a way to future‑proof the organisation. It allows the company to stay ahead of regulations, meet customer expectations and compete in global value chains.

15.2 The future of ESG

Looking ahead, several trends are likely:

• More mandatory reporting – Frameworks such as CSRD, ESRS and ISSB standards will push ESG disclosures from “nice to have” to “must have” for more companies, including some SMEs.
• Better data and technology – Digital platforms, automation and AI will improve ESG data collection, analysis and reporting, reducing manual burden.
• Stronger focus on outcomes – Stakeholders will look beyond policies to real‑world impact: emissions reduced, injuries prevented, communities supported.
• Integration into strategy – ESG will be embedded into core business decisions, from product design to supply‑chain management and capital allocation, not treated as a separate add‑on.

Elite Asia’s ongoing thought leadership, including Navigating ESG Excellence: Insights from Elite Asia’s 2024 ESG Seminar and Sustainable Marketing: ESG Communication Insight for Effective ESG Communication on Your Website, reflects this shift towards integrated, value‑creating ESG.

16. Turning ESG Principles into Action

For general readers, business leaders and SMEs, the following steps are:

1. Learn the basics – Use resources like What is Environmental, Social, and Governance (ESG)? and A Simple Guide to ESG Criteria for Beginners to build a shared understanding.
2. Clarify your priorities – Decide which ESG topics are most material for your organisation and sector.
3. Align ESG principles and corporate values – Make sure your ESG commitments reflect who you are as a business, not just external pressure.
4. Strengthen reporting and frameworks – Consider guidance from articles like How to Make the ESG Reporting Process Less Painful and Leveraging Digital Technology for ESG Reporting to Meet Carbon Regulations and Sustainability Goals.
5. Invest in skills – Explore training options such as How to Convince Your Boss to Invest in ESG Training (and Get It Funded) and the ESG courses in reporting and rating systems.
6. Connect ESG to growth – Study how sustainable investment trends can benefit your company through ESG Investing: How Companies Can Benefit from the Sustainable Investment Trends.​

Call to Action: Build a Practical ESG Roadmap

If your organisation wants to move from ESG awareness to real implementation, whether you are an SME starting or a larger business refining your strategy, specialised support can save time and reduce risk.

Explore Elite Asia’s Transformative ESG Solutions for Modern Enterprises to:

• Assess your current ESG maturity.
• Design an ESG roadmap that fits your size and sector.
• Develop reports aligned with recognised frameworks such as GRI and GRESB.
• Upskill your team through structured ESG training and advisory.

By grounding your decisions in clear ESG principles, aligned with your corporate values and supported by robust reporting, your business can stay compliant, attract investment and contribute meaningfully to a more sustainable future.