Environmental

It seeks alternatives capable of assisting in neutralizing negative impacts on the natural environment, aiming for a regenerative approach at a higher level of development and commitment. Some mechanisms that have helped evolve sustainability in its environmental pillar range from energy transition, through the reduction of emissions of polluting gases and aggravators of the greenhouse effect, to good natural resource management, and the adoption of circular practices, minimizing the generation of solid waste and improving the percentage of environmentally appropriate disposals.

Social

It seeks social equity through adherence to labor rights, safeguarding the health and safety of employees in the workplace, valuing diversity and inclusion, commitment to fair compensation and dignity for its employees, as well as involvement with the community in which the company operates, aiming for its development, and the company’s stance on social causes and projects and responsibility towards customers regarding the provision of suitable products that do not pose risks.

Governance

It seeks ethics in the institution, through the adoption of institutional policies for the control of operations and behavior, such as anti-corruption practices, money laundering, and slave labor, etc., transparency in the compensation policy, appreciation of accountability and corporate responsibility, and veracity of product and process information from the company.

After all, no company can generate positive socio-environmental impact in the long term without governance. The company will hardly focus on the long term, be able to use resources in the best possible way and have a good relationship with stakeholders.

Why is ESG the future?

One of the main reasons for the growth of the ESG approach is the urgency to address climate change. According to the United Nations, in order to limit global warming to 1.5°C above pre-industrial levels, carbon emissions need to be reduced by 45% by 2030 and zeroed by 2050. Over 70 countries, representing about 76% of global carbon emissions, have already committed to net zero emission targets.

In the coming years, it is likely that new regulations will emerge, requiring major emitters to invest in innovative processes, support the costs of neutralizing their emissions, or risk losing space to more environmentally friendly products and processes. Carbon emission regulation affects sectors in different ways, posing risks to some and opportunities to others. However, environmental emergencies are not limited to carbon emissions alone, they also include issues such as water scarcity, loss of biodiversity, and waste management, highlighting the importance of private sector involvement in this agenda.

Along with the size and importance of companies come expanded responsibilities. While in the past, companies could focus solely on growth and profitability, today their role in society is more comprehensive. Companies that adopt ESG practices face fewer risks of involvement in legal, labor, and fraud issues; experience reduced operational costs and productivity gains; gain the loyalty of customers who value sustainable products and services; enhance brand image and reputation; have access to green credit lines; and achieve better satisfaction, attraction, and retention rates for talent.

Additionally, organizations incorporating ESG strategies are more likely to attract additional investments, as investors prefer to allocate resources to companies that have already internalized these practices. There is also a higher likelihood of increased profitability since adopting these practices implies rigorous financial control, resulting in superior company performance in this aspect. Another crucial aspect is risk mitigation, as adherence to the ESG agenda reduces legal, regulatory, and labor risks, such as the possibility of environmental fines or labor-related lawsuits. This is because ESG criteria also promote the appreciation of employees, resulting in a more positive relationship between them and the company.