How to maintain economic growth, without causing damage to the environment and with social development? This question, asked in 2004 by the then Secretary General of the United Nations (UN) Organization Kofi Annan, addressing 50 CEOs (Chief Executive Office) of large financial institutions, prompted economic leaders around the world to evaluate the accountability for the damage caused by unbridled production and focused only on capital profit. The unfolding of responses to Kofi Annan's incitement gave rise to the term ESG (Environmental, Social and Governance), translated into a set of business governance practices, social development and care for the environment, inserted within the scope of the production chain across the globe. Officially, the term was used for the first time in the publication “Who Cares Wins” (freely translated as “who cares, wins”) of the Global Compact in partnership with the World Bank, also in 2004.

From the theoretical advent on the subject, virtually all World Forums that debate economic development, or environmental issues or human development issues began to adopt the ESG Agenda debate, indicating that the path of all agreements and actions delimited in these meetings will focus on social development, care for the environment and corporate governance.

ESG schedule

It is no longer possible to talk about business economic growth – of profit – without addressing social development and care for the environment. This statement is already unanimous, but it is still not mandatory in the design of commercial guidelines.

When we talk about an ESG Agenda, we are talking about the whole set of practices adopted by companies, industries, institutions, or any entity of economic production, and which will have included in their financial growth goals, the goals of impact on the environment, social and institutional governance norms.

In its application, the ESG Agenda goes beyond the monetary profit stipulation. Profit, within any institution, will always be taken into account and constitutes an important objective to be achieved in any business planning. But not just that anymore, now is the time to implement, in addition to financial profit, the plan of goals that mainly include:

– Reduction of environmental impacts in the production process of goods and services;

– Economic Decarbonization actions, carbon footprint reduction, Net Zero and Climate Negative;

– Mitigation of Greenhouse Gas (GHG) emissions;

– preservation of ecosystems and springs;

– reduced impact on communities involved in the production chain;

– corporate policies on decent working conditions;

– transparency in business management, disclosure of data, actions to combat corruption and money laundering;

ESG deals above all with the convergence of interests of all interested parties – the Stakeholders – in the entire process of global economic development. These are corporate practices that add value and provide security for investors. Companies that have already implemented the ESG Agenda in their routines have come out ahead of the new global economic expansionist race: they already meet market requirements that will soon become compulsory. For the next decade, those who are not following the ESG path will necessarily need to adapt processes and realign goals – putting institutions that have already adopted the process in a position of greater advantage and reliability for market investors. ESG is the new management format, so everyone will go through the transition of production processes and adaptation to social care standards and nature, added to economic growth.

Why is getting ESG Governance off the ground Important for the Economy?

A survey by the Associação Brasileira de Comunicação Empresarial showed that 61% of Brazilian entrepreneurs understand the importance of ESG, but do not clearly know the subject, nor how to implement an ESG Agenda in their companies. This is because the implementation of ESG Governance includes a reformulation of the work structure and efficiency parameters.

But now is the time to act and remove ESG Governance from projects and move on to implementation. Companies that already work with ESG goals such as data transparency actions, responsible productive efficiency and business ethics, generate confidence in investors. When corporations adopt ESG Governance practices, the entire process that involves the business practice is available to those who invest resources in the business and expect results. Ratings are measured based on:

– establish the relevance of the topics to be analyzed;

– apply monitoring and data collection techniques, with reliable and measurable processes;

– define goals for each topic collected, according to SMART goals – Specific, measurable, attainable, relevant and time-bound.

The processes involving the ESG Agenda for business administration are capable of generating very accurate reports, which collaborate with market projections on institutional stability, its position in the market – local or global. The reports are, therefore, management tools and safe projections of production efficiency.

ESG Actions for Sustainability

The climate transition forces the debate on the implementation of the ESG Agenda throughout the production chain. Greenhouse Gas (GHG) emissions, especially carbon dioxide, are on the agenda of all International Forums dealing with nature conservation and the perpetuation of life on this planet.

Data from the Intergovernmental Panel on Climate Change (IPCC) – from the UN – released in November 2022, show a disastrous future for the climate, if we do not act quickly and transform our actions. The ESG Agenda for environmental conservation then becomes an unavoidable maxim.

It is non-extendable that all corporations involved in the devastation process initiate, amplify and accelerate the empirical actions of:

– zero carbon targets, adopting a plan to mitigate GHG emissions;

– adoption of climate positive goals, removing more carbon from the atmosphere than they emit;

– projects to increase the efficiency of land use;

– efficient water consumption actions;

– corporate waste management policies;

– biodiversity conservation plans;

By addressing sustainability issues and proposing actions for change, to curb the advances in the degradation of the Earth's natural resources, we are dealing with the longevity of our own subsistence. If we want to continue to live and depend on this planet, energetic actions to intervene in the degradation of the environment are urgent.

ESG Actions for Human Development

The ESG Agenda proposes a caring approach to people. The production processes, which were conventionally more efficient until a recent past, involved attitudes of exploitation of workers, removal of basic rights in labor relations, the pressure for productivity above social welfare and, in many productive sectors, the loss of in the quality of life in communities that live close to large corporations or that depend on the activity of these companies.

Understanding that people's well-being matters as much as the demand for productivity, the ESG proposes activities that involve employees, managers and the community in favor of productive, fair work, in accordance with the labor legislation of each location and, mainly, with the Declaration Universal Human Rights.

Develop human capital, invest in education for life in society, offer fair wages compatible with the functions performed, invest in healthy work environments. These are some examples of the goals of the ESG Agenda, which encompass all the corporations' Stakeholders and collaborate for greater productive efficiency, improvement in personal and community social conditions, and guarantee stability throughout the chain of generation of goods and services. Stability is the key to attracting investors concerned with profit, society and the environment – the tripod of the global market for this century.