Inclusive, greener and more humane. Would these be the words that belong in a future that has already been incorporated as part of our present? We are in a moment in which innovation, the development of sustainable businesses, digital transformation and the quest for effective results, shape corporate strategy. But how can we truly meet such goals?
To Viviane Martins, our CEO and a Leader with Impact from Brazil´s Network for the UN Global pact, some issues have collaborated to the evolution and the maturation of companies. One highlight is ESG (Environmental, Social and Governance).
“I believe that the awareness brought about by ESG in society and in corporations is very important. Firstly, because the three pillars, environmental, social and governance must be integrated” she points out, and she emphasizes the need of producing positive and measurable impacts in business models and strategies of corporations.
The current, but not so new ESG
Despite the current heated scenario, the themes that make up ESG had already been unfolding for some years. Corporate governance is one of the pillars that started being prominent in the 1990s. From then on, environmental and social have also gained importance in corporate debates and on the achievement of goals. The acronym, however, first gained recognition in the year of 2004 after the publication of the document “Who Cares Wins” “This current movement is very positive, but it isn´t 100% new. It´s important to bring this to the Brazilian agenda and understand that many companies have been trailing such tracks for some time. Some industrial sectors, for example, had been searching for an improvement or their energy mix”, stresses Martins, and she adds: “in many industries we already have a cleaner energy mix, and that is no surprise given our sustainable goals, known as ODS, which the UN Global Pact suggests we should promote for the 2030 agenda. Brazil only stands a chance of meeting such goals precisely in the field of clean energy.”
“This momentum that is being created by ESG is very important, but we cannot forget that other initiatives already existed and must now be integrated“.
ESG and the green economy, principles that walk hand-in-hand
Sustainable finances are also connected to the ESG pillars. Currently the public and private sectors apply this concept in order to promote more conscious capital initiatives, divulge innovation, generate jobs and climatic solutions, therefore benefiting all stakeholders. Movements that put relevance in the market and help set goals and actions.
“In this ESG agenda, we see a very important contribution coming from the financial sector. Not only green actions are being valued but, for example, investment funds and major banks are making some portfolios available specifically for credit operations that have a real sustainable value and focus on an improvement on environmental impacts. This is what we call green economy”, explains Martins.
“More than having an impact, we must promote balance, because this is one of the cornerstones of sustainability. Promoting the balance between environment, society and corporations, the three pillars in a harmonious way.”
More than results, impact
It is still common to correlate achieving results with financial matters. But what really defines good results? Putting the environmental, social and governmental pillars in harmony. That is, having a purpose to generate impact. There is a reason for impact-generating investments to be growing in Brazil. The business model that, more than profits, seeks to collaborate with issues like reducing environmental degradation and social inequality, is gradually becoming an important subject for companies. “We are talking about generating value that is not exclusively at the service of shareholders, but also of employees, society, the environment, governments and all actors that are connected with that specific company. The results are not only economical and financial, that alone is no longer enough”, Falcony CEO reiterates.
So, how to effectively reach such impact? Having a strategic plan is fundamental. It is necessary to invest in well-defined metrics in the long, medium and short terms. Being watchful of goals and understanding companies that are effectively committed to this cause. Besides, it is also relevant to understand not only if you are going in the right direction, but also if you are doing it at the expected pace.
“Every strategy the corporation has, be it one of growth, innovation, conquering a new market or of transformation, ESG must underpin it, it must be a key element in each step“.
Another relevant matter, is the generation of value to other businesses. Giving preference to local supply chains and smaller vendors are also ways of expanding your purpose. Helping the growth of small and medium-sized businesses, and helping their introduction to ESG practices is an initiative that meets SDG# 8 (Decent Work and Economic Goals).
“Big companies will have a relevant role in helping broadening this movement, as they can, through the supply chain in which they are involved, reach medium and small-sized companies which, often times, haven´t been touched by the movement and are unable to put meaningful ESG improvements into practice”, she points out”.
And what are the challenges for the future?
According to Martins, the social debate is a pillar that companies must develop further and to which they should pay more attention. “There are some metrics to gauge social impact, but I believe they need to have a broader scope, be better known, and it must be understood that social issues are not just charity. It is about really seeing the people in each and every institution and taking care of people. And I am also referring to mental health, a topic that has achieved wide awareness in the pandemic. From these core issues we can expand the reverberations in society as a whole”, she advises. Secondly, it is important to understand that, for our society, mitigating wrongdoings alone is not enough anymore. It is necessary to act up and move up from mitigation to prevention. “It´s not enough to be anti-racist in a company, for example. We must be able to promote anti-racism. Bethat in the relationships with vendors, customers and other companies, the challenge is for companies to take a protagonist role and not only to retreat to self-preservation, she remarks.”
“More than having an impact, we must promote balance as this is one of the cornerstones of sustainability. Promoting the balance between the environment, society and corporations; the three cornerstones in a harmonious way.”
A promising future
It is expected that, in 2022, more leading companies get effectively engaged in the cause. An effective, qualitative and lasting corporate behavior, in which all involved parties can reap the benefits. “I truly believe in what I call a win-win relationship, and as long as us, corporations, can´t find this opportunity where the company wins, society wins, and the environment wins, in an ethical way, this wont prevail. I have a lot of confidence that ESG isn´t just a fad, that it isn´t going to be around for just a month or a year. I believe it is the new mindset and a way to manage and steer companies. So, for this to happen in the long-run, we need to think about these win-win situations”, states Martins. A more inclusive future must also embrace Brazil, and education is one of the mechanisms to set that journey in motion and to spread productivity around. “A company that becomes more sustainable, is also more attractive for potential employees. Nowadays, people have been paying more attention not only to environmental issues, but also to diversity, inclusiveness, and they choose the company they want to work for”, she sums up. To our CEO the question that moves her is “how can we transform the future in an exponential way”? Innovation is, for sure, one of the ways to reach this goal. We are here talking about companies that propagate change, innovate and still contribute to the business and to society.
Want to know more about the subject?
Listen to the episode of the podcast “Questions that Move Us” with Viviane Martins.