COMPEL Glossary / esg-environmental-social-and-governance
ESG (Environmental, Social, and Governance)
ESG is a framework for evaluating corporate behavior and sustainability across three dimensions: Environmental (climate impact, resource usage), Social (labor practices, community impact, diversity), and Governance (corporate ethics, board oversight, transparency).
What this means in practice
ESG criteria increasingly incorporate AI ethics as part of the Governance dimension, with investors, rating agencies, and stakeholders examining how organizations govern their AI systems. Responsible AI practices contribute positively to ESG scores: demonstrating fairness in algorithmic decision-making, transparency in AI-driven processes, and accountability for AI outcomes. In the COMPEL framework, the 'trust dividend' concept describes how responsible AI investment translates into investor confidence through improved ESG ratings, lower cost of capital, and enhanced stakeholder relationships.
Related Terms
Other glossary terms mentioned in this entry's definition and context.