ESG – What is it? How to Fit your Company

ESG is a set of practices that consider environmental, social, and governance issues. Through these practices, it is believed that companies and organizations can collaborate in improving the quality of life on the planet. This happens because companies begin to understand their impact on society and the environment.

Social and environmental concerns are considered essential in risk analysis and investment decisions. It also improves the added value of the brand, positioning the company against competitors. A company that invests in ESG shows interest in allying itself with movements in favor of humanity and nature.

In this post, we invite you to understand the details of what ESG is and the meaning of the acronym. We show the principles and how they are essential in this attempt to save the planet from environmental disasters. In addition to being a great alternative in the search for more respectful and valuable human relationships. You will also understand what changes are necessary for your company to receive this seal.

In this post:

• What is ESG?
• Why is ESG so important lately?
• What are the principles of ESG?
• How to Fit your Company?
• Get to know Redda+

What is ESG?

The pillars of ESG stabilize as a new way of thinking about sustainability in business. The purpose of the seal is to disturb companies and institutions regarding environmental, social, and governance relations. Governance is basically the administrative area of ​​a company. Thus, more balanced growth is expected.

ESG is a reflection of what has already been put in evidence about the need to deal with the challenges and vulnerabilities of society. Therefore, it is fully integrated with the UN Sustainable Development Goals (SDGs) and has gained relevance in Brazil.

A study by the Pacto Global Rede Brasil revealed that ESG Brasil is a very present subject in social networks. In addition, the industrial sectors are opening the door to the discussion of the subject. In June 2022, for example, at Confraria ESG, the subject was the protection of the ocean on the Brazilian coast. It raised the role of the sanitation, oil and gas, and chemical sectors in this water conservation scenario.

What does the acronym ESG mean?

The acronym ESG stands for Environmental, Social, and Governance. The term was used in a publication of Pacto Global in partnership with the World Bank, in the year 2004. The document “Who Cares Wins” was the result of the provocation of UN Secretary-General Kofi Annan to 50 CEOs of important financial institutions. They were asked how the capital market has been integrated with social, environmental, and governance factors.

The proposal is for companies to integrate the purpose of business with positive impacts on society and nature. Through ESG, companies are encouraged to invest in relationships with customers, employees, and partners. There is no denying that these precautions generate benefits for companies.

In Brazil, companies such as Natura, Boticário, and Banco do Brasil are some of the national organizations associated with ESG. The trend is for a growing involvement, as Brazilian consumers are very much attuned to this relationship.

Why is ESG so important lately?

ESG is a value in which companies declare their commitment to the market, people, and consumers. It is an attempt to show that businesses are not only concerned with the capital generated. But there is a concern with the whole. The role of the company in society is increasingly at stake.

Thus, there is a concern to add value to the company and the services, as well as products, offered. In addition to social issues, concern about climate change has greatly driven the growth of the ESG agenda.

At present, environmental issues and social problems should not be ignored. These concerns surround the entire production chain, after all, human beings need to be well to produce. The natural environment needs to be well to offer raw materials.

It is a process of raising awareness of the importance of the well-being of absolutely all living beings on the planet. There is no business without people, much less without nature!

ESG standards are increasing the competitiveness of the business sector, improving the organization’s positioning in the market. In a way, a company with ESG criteria has a better reputation and indicates better strength in the market.

What are the ESG principles?

The ESG seal’s principles are to encourage the growth of companies engaged with socio-environmental issues. The letters of the acronym direct the mission of ESG practices:

Environment | This principle analyzes the impacts caused by organizations on the environment. What are the solutions found by these organizations to avoid, for example, pollution, or to reduce waste? In addition to actions that help combat global warming and reduce carbon emissions. All issues directly and indirectly linked to the environment are explored in this principle.

Social | This principle is directly connected to Human Rights, which is the behavior of the company in favor of the community. How does it position itself before the society in which it is inserted? In addition to society, internally, does it apply inclusion and diversity in the team? It is also necessary to consider the quality of the work environment and to pay attention to which partnerships are being closed. That is, are the suppliers and partners also aligned in this universe of socio-environmental concern?

Governance | In this principle, the company is committed to ethics and maintains a team to deal with the transparency of the business. In addition to an ombudsman for employees to communicate with security and tranquility. The organization’s management policies must contain anti-corruption action, and efficient audits, among others.

The ESG pillars favor the growth of a healthy business, which maintains a good internal and external relationships. In addition to keeping up to date on environmental needs.

How to fit your company?

Your company’s framework for ESG principles is not complex, therefore, reflects on corporate sustainability. Does your company understand the positive and negative impacts on society, the environment, and internally? Are solutions being analyzed that can be put into practice for the well-being of all?

To help with this ESG engagement process, consider the 10 principles of the Global Compact:

1. Respect and support internationally recognized human rights in its area of ​​influence.
2. Ensure that the company does not participate in human rights violations.
3. Support freedom of association and recognize the right to collective bargaining.
4. Eliminate all forms of forced or compulsory labor.
5. Eradicate all forms of child labor from its production chain.
6. Encourage practices that eliminate any type of discrimination in employment.
7. Assume practices that adopt a preventive, responsible, and proactive approach to environmental challenges.
8. Develop initiatives and practices to promote and disseminate social and environmental responsibility.
9. Encourage the development and dissemination of environmentally responsible technologies.
10. Combat corruption in all its forms, including extortion and bribery.

In addition to these principles, it is important to ask yourself about your company’s contribution to achieving the UN Sustainable Development Goals. You can develop projects in line with some of the objectives, and even apply changes in the company. In total, there are 17 objectives that integrate, directly or indirectly, social, environmental, and economic concerns.

Before starting all the changes, consider carrying out a survey of the company, evaluating its purpose and how it can help society. It is a long-term change, so it is important to define a team to carry out the diagnosis and present the necessary actions.

Find out how Redda+ and you can help preserve the Amazon

Redda+ is an institution with ESG pillars very present in its mission in the Amazon. This is because Redda+ develops projects that integrate social, economic, cultural, and environmental issues. Some of these projects are applied in traditional communities in the Portel region, in Pará.

In addition to its commitment to developing sustainable projects, Redda+ maintains an internal responsibility toward its employees. And together, we understand the importance of considering the 17 UN Sustainable Development Goals. All these considerations are essential for the empowerment of communities.

The reflection of this opportunity to develop skills in traditional communities is the conservation of biodiversity. In this scenario, everyone wins! The forest is not denied to communities and they receive support to integrate in a sustainable way. To top it off, this relationship benefits everyone, as the communities are true guardians of the forest.

Click here and closely follow Redda+ projects and actions, and understand how your company can collaborate in sustainable changes. Involvement with Redda+ through partnerships is important to continue projects in the Amazon.