Environmental – Social – Governance (ESG), quick guide


Environmental – Social – Governance (ESG), quick guide

What is ESG?

ESG stands for Environmental, Social, and Governance.

In the last decade Investors are increasingly applying the above mention non-financial factors as part of their analysis process to identify material risks and growth opportunities. Approximately 72% of global investors in 2022 said they use ESG principles in their investment approach and decision making.

Meanwhile, Business and law firms in North Macedonia are having trouble to understand the meaning of the ESG principles, and how it benefits in their everyday business activities. Also, ESG principles may not always fit into one specific category. However, climate change is a good example. As a result, we usually think of it as an environmental issue, but it has far-reaching implications that include social and governance risks. In the same manner, changing weather patterns can disrupt supply chains, while company boards can support or oppose requests from shareholders for transparent climate-related disclosures.

Examples of ESG principles:

climate changeemployee health and safetyexecutive pay
greenhouse gas (GHG) emissionssupply chain riskbribery and corruption
biodiversitycybersecurity and data privacyboard diversity and structure

Moreover, Traditionally, a manager chooses to invest in companies based largely on their financial metrics and reports. In the same way, they might look at things like earnings, profit margins and debt levels. However in recent years, there has been a growing focus on looking beyond the balance sheet. Therefore, when you integrate material ESG principles into the investment decision-making process, you can assess many other kinds of risks a company faces. For example, investors may ask:

Environmental: How does a company’s business impact the environment?Social: How does the company interact with its employees, customers and communities?Governance: How does the company govern itself? Is it free from bribery and corruption?

Strong versus weak ESG practices

On the other hand, ESG risk refers to a risk a company may face due to weak ESG practices. Here are some examples of strong versus weak ESG practices:

Company FocusStrong ESGWeak ESG
EmployeesEngagement, strong culture, innovationLack of training, unsafe conditions, high turnover rate
CustomersResponsiveness, availability, dispute resolutionNo returns policy, poor labelling, over-charging

North Macedonia business are recently starting to implement and noticing the ESG principles as important factor for growth of their business. In that line the Macedonian Stock Exchange, has recently adopt a ESG REPORTING GUIDE FOR LISTED COMPANIES, which helps the listed companies on Macedonian Stock Exchange, to adopt, understand and implement the ESG principles.

Taking into consideration the growing development of ESG principles, which will be determined factor for investors in future, Tosic & Jevtic law firm, as one of the leading law firms in the corporate sector, joint their forces with ESGPRO, UK based company, one of the leading companies in implementation of ESG sustainability reporting in UK, to help and assist the Macedonian business to implement the ESG factors.


We believe that in the next 5 years, ESG principles, will become one of key factors for foreign investors which will determine if they will be investing in Macedonian companies or their A&M.

Also, we as a law firm believe that if Macedonian companies want to export their products to western countries and companies, especially within the EU, UK, Canada or USA, their ESG or sustainability report will be one of the key factors that the foreign partners will require and ask.

Additionaly, if Macedonian companies, want to be part of the global trade, expend their export, cooperate with foreign companies, or attract foreign capital, investors of buyers, it will be inevitable to adopt and implement the ESG principles and standards.  In the end the ESG principles, stand for better environment, better inclusion, better protection of the employees, and better customer satisfaction, then business that implement these factors, will show of with better financial results and profit. 

Our law firm and our partners from ESG PRO are ready to take you to the next principles step and make your business more attractive and profitable.

Ivica Jevtic

Ivica Jevtic - Managing partner at Tosic & Jevtic law firm 


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