Companies adjust focus to ESG – 05/04/2021 – Opinion

It is no coincidence that, in the last year, the acronym ESG (Environmental, Social and Corporate Governance) has become increasingly ubiquitous in the business world. It refers, as we know, to “environmental, social and governance”, the synthesis of the responsibilities that are expected of a company.

The ground was already being prepared for some years by pioneering companies and investors, but the pandemic catastrophe of the new coronavirus brought at least two important accelerators.

First, it showed that the great problems and challenges of this century will be global and will therefore need to be addressed collectively.

Second, it revealed that the business ‘license to operate’ is increasingly associated with the behavior of these businesses in the face of sustainability challenges for the environment and their communities in this moment of crisis.

In this scenario, companies were called upon to assume their share of responsibility, and the adoption of ESG policies signals this type of perennial commitment to the community and the planet.

The future, it seems, belongs to those entrepreneurs capable of demonstrating a real commitment to the values ​​embedded in these three words.

The trend observed since the beginning of the pandemic has intensified with the election of Joe Biden to the Presidency of the United States. Since the campaign, Biden has announced that the environmental issue would be a priority.

A first move in this direction was made early in the mandate, with the reincorporation of the USA into the Paris Agreement.

Now, when the hundred days of government have passed, we have already witnessed some practical effects of American politics. The emphasis given to the recent Climate Summit, both by the international press and by the global leaders themselves, gives the dimension of how the greatest economic power on the planet can influence the pace of the sustainability agenda.

In the world of 2021, anyone who wants to do business needs to prove that they have social responsibility. The reasons for this are quite practical. Billion dollar markets like Europe already require social and environmental certifications for the entry of some imported products. In the medium term, the tendency is for the quantity and specificity of these requirements to increase. Shareholders are well aware of this, hence the efforts of many companies, especially in exporting sectors, such as protein or cellulose, to prove their good practices.

The credit market is also beginning to adapt to these new trends. The idea that banks should make loans conditional on compliance with social, environmental and governance goals, transparency and diversity, is gaining strength. With that, the circle closes even more for the few companies that insist on disregarding ESG in their growth plans.

It is clear that implementing such an agenda involves some expense. Maintaining a social program has a cost. Reduce environmental impact, adopt clean energy, create selective and career processes that value diversity, idem. At the very least, it is necessary to invest time in formulating strategies, reviewing some practices and defining new priorities and goals.

Fortunately, most large companies have realized that this spending is, in fact, an investment. In the current international context, commitment to ESG practices is no longer an option. Faced with the demands of consumers and investors, companies that want to survive will have to go beyond rhetoric in the defense of society’s interests.

TRENDS / DISCUSSIONS

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