The importance of ESG for the longevity and legacy of companies

ESG in 2023: The indispensable role of technology in changing the agenda

The ESG (Environmental, Social and Corporate Governance) has been consolidating itself as the most relevant reference for the longevity of corporations based on pillars far beyond results and profits. Regardless of the sector, these three letters — which are replacing the term sustainability in the corporate world — affirm an organization’s commitment to environmental, social and governance issues.

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The ESG is a lever of value for companies that, aware of changes in consumer profiles, effectively start to adopt good practices as part of their daily lives. With the transition from an industrial economy to a digital one, intellectual capital gains prominence, while intangible factors start to further impact the reputation of companies.

The commitments established by the ESG must permeate all of a company’s activities. From people management and employee engagement to the sustainable production of goods and services, with business strategies that include benefits for the most varied audiences with which a company relates. It is indispensable to effectively adopt social actions and care initiatives for people in vulnerable situations, contributing to a virtuous circle of improved living conditions for human beings.

In 2021, McKinsey pointed out that the term is paramount in investment, mergers and acquisitions issues. ESG is here to stay and is a mandatory item on the agenda of investors and financial bodies. On the American Nasdaq stock exchange, listed organizations must publish, since last year, information regarding diversity on the board. Around here, the Securities and Exchange Commission (CVM) adopts a similar initiative in 2023.

Specialists point out that, due to the ESG, we should also observe the growth of sustainable technologies, which represent an opportunity for competitive differentiation for companies, in addition to a greater commitment in the application of resources. As a consequence, it is expected that a new value chain will be designed by customers and suppliers, with the aim of meeting ESG demands and meeting the respective goals.

It is not enough for technology companies to deliver projects, products and services. It will be necessary to consider environmental, social and governance impacts and regulations, with practical and effective actions inside and outside organizations. This complex movement could change the entire ecosystem of stakeholders of a company and, when it materializes, profit and success should be projected in the medium and long term, improving the user experience.

The quality of the companies’ management; the organizational culture and climate; excellence in production; sales and customer service, with emphasis on post-sales and the ability of its teams to constantly innovate, are consolidated as the most important aspects in determining value.

Another consultancy, KPMG, launched the study “S de ESG – Social Governance for Startups”, in partnership with the venture WE Impact. The survey showed that startups with more women in leadership devote more attention to the subject. Companies with female leadership have 54% performance in the environmental area, 53% in the social area and 48% in governance. When men are ahead, the percentages drop to 40%, 42% and 46%, respectively.

The planet deserves and needs similar dedication on the part of companies, which is already happening, as shown by data from a study by the Advisory Office for Economic Reviews and Risk Management (ASA), in collaboration with the Brazilian Institute of Corporate Governance (IBGC). One of the findings of the survey indicates that global sustainable investments grew 15% and reached the mark of US$ 35.3 trillion.

Global airlines, for example, invest in carbon offsetting and in aircraft powered by hydrogen or hybrids, seeking to reinforce their commitments to the environment. A powerhouse of the Brazilian economy, agribusiness is also aware of this issue, as shown by a survey by Michael Page consulting, which pointed to a 50% growth in the search for ESG professionals for the sector. Another survey, by the giant PwC, indicates that Brazilian agro leaders believe that their companies need to do more to disclose their environmental impact.

Extending this Reviews to other sectors of our country’s economy, the number of companies that report their carbon emissions has doubled in the last three years, reaching a record level. The information is part of a survey by the Center for Sustainability Studies at the Getulio Vargas Foundation (FGV). Data indicate that 305 companies published a greenhouse gas inventory in 2021, an increase of 108% compared to 2018.

To support SMEs in transforming and leading their own sustainability journeys, the market already has technology resources to calculate and manage the carbon emissions of a business quickly, intuitively and allowing its neutralization with carbon credits.

A similar path must be followed by distribution and logistics companies, whose business chain involves the importation of products and the disposal of the wealth produced by the country, primarily by road, with transport of cargo over continental distances, as is the case in Brazil.

The impacts and opportunities arising from the ESG signal certainty for the coming decades. Companies can and must act responsibly towards society and the planet, with good corporate governance practices, as it is from these new directions that it will be possible to achieve financial performance and guarantee the legacy and longevity of great brands in the future.