The term ESG (Environmental, Social and Governance) is gaining more and more space in the corporate world and is strongly related to the search for sustainable practices. In this article, we have collected the main information on the topic. You will better understand the concept, its implications in the market, and how to implement its practices in an organization. Check it out!
The term ESG appeared in the 2000s, when the United Nations Global Compact launched the so-called “Principles of Responsible Investment”. The idea is to establish a balance between the search for profit and social and environmental aspects. In recent years, the concept has become a reference for evaluating the performance of companies with regard to sustainability.
ESG practices are linked to each of its pillars, which we will explain below:
ESG environmental practices are associated with three other essential terms when it comes to sustainability:
the carbon footprint, which measures the amount of greenhouse gases emitted as a result of an organization's activities;
waste management, related to practices such as material recycling and effluent treatment;
the circular economy, which aims to reduce waste and promote the efficient use of natural resources.
Social aspects refer to the impact that an organization has on the society and the community in which they are inserted. Your concerns include:
respect for human rights;
The third pillar of ESG is corporate governance, which refers to the company's management and decision-making structure. It directly affects the definition of objectives and the way in which the organization is held responsible for its actions. Good corporate governance involves:
A survey published in 2022 by the National Confederation of Industry (CNI) showed that Brazilian consumers are increasingly concerned about the origin of the products and services they consume.
According to the survey “Portraits of Society: Sustainable Habits and Conscious Consumption”, 74% of the interviewees declared themselves environmentally aware.
In addition, investors also recognize that businesses with sustainable practices have a greater chance of long-term success. For this reason, many of them incorporated ESG criteria into their analyses.
This line of thinking is also very present in the labor market. Generation Y - made up of those born between 1980 and 1995 - are more interested in companies committed to important and socially responsible causes.
The implementation of ESG must be seen as a process of continuous improvement, a key concept in quality management. In general, the stages of this work are consistent with the good practices proposed by the ISO 9001 standard. They are:
At this stage, the company must define the objectives it wishes to achieve and draw up a clear strategy to achieve them. All employees must be involved in this process. The priority at this time is to identify which ESG practices have already been adopted and which need to be initiated.
In the execution phase, the organization must implement the actions defined in the planning. This may involve tasks such as:
implement sustainability policies;
conduct training for employees;
adopt more sustainable technologies in the production process.
It is important to value transparency about the actions you are taking and clearly communicate your objectives and progress.
It is important to regularly monitor and evaluate the progress of the project using performance indicators. Among them, we can mention:
Based on the monitored indicators, it is possible to identify opportunities for improvement and implement adjustments to the strategy. It is important to always be open to changes and adapt actions to new market trends and challenges.
It should be noted that the implementation of ESG should not be seen as an isolated project. It must be an important part of the company's strategy and be aligned with other business objectives.
It is also essential to understand the importance of suppliers in this adaptation process. As the supply chain is a critical part, the company must choose business partners who are equally committed to the concept of sustainability.
This will allow the development of innovative solutions for processes and products, increasing operational efficiency and reducing costs in the long term.
In this context, one of the main challenges is to optimize the use of water resources. To delve deeper into the topic, check out 6 water preservation actions that your company can take today!
