Social criteria evaluates how a company manages relationships with and creates value for stakeholders. There is a growing investor interest in obtaining detailed information about how companies enhance workforce skills, manage risks related to supply chain oversight and product safety, as well as respond to high-profile human rights abuses, which can substantially affect brand reputation. The direct connection between employee and consumer engagement and overall profitability underscores the importance of these factors.

Governance criteria address company leadership and management philosophy, practices, policies, internal controls and shareholder rights. When information about a company or its products is limited, investors and customers tend to form assumptions about the quality of management. Insufficient accountability and due diligence can result in losses for both customers and investors. The level of transparency in disclosures and reporting serves as a reliable indicator of how well ESG factors are integrated into the daily business operations of a company. This integration not only helps prevent opposition from stakeholders but also contributes to the creation of long-term value.