Cristina Ferreira, Managing Partner of Strategy & Operations at Brighten wrote an article on how Brighten can help your company on its journey to ESG.
(E)nvironmental (S)ocial and (G)overnance must be the most written acronym in management world in recent months…, but do you know what it actually implies?
Few managers have not heard of this subject. But unfortunately, many still associate it only with environmental and social responsibility issues. If we do waste separation, some recycling and perform actions which we compile in a social responsibility report, they consider everything is fine. But it isn’t!
ESG is seldom associated with Compliance and Competitiveness issues. But that’s exactly what we’re talking about: Compliance and Competitiveness.
Since the publication of Regulation 852/2020 of the European Taxonomy, which established a set of principles and assumptions for a certain economic activity to be considered sustainable, a series of laws on reporting duties, delegated acts, sustainable finances, among others, has been published. Dozens of sustainability ratings have emerged and financial sector, investment funds and investors are increasingly looking at how companies manage these issues when making investment decisions.
Access to European funds, bank financing, to market and supply chain of large companies and government, as well as company shareholder value, are influenced by how companies look at ESG issues. You need to have policies and implement, evaluate and improve them. It is a never-ending cycle.
After all, what does each of these pillars mean in practice?
(E)nvironmental relates to climate change, transition to carbon neutrality [2050], energy transition, circular economy, pollution control, responsible production, responsible consumption, sustainable use of water and other scarce resources, and biodiversity.
(S)ocial relates to human capital management, mental health, intergenerationality, employee engagement, future of work (employability, upskilling/reskilling/digital skills/just digital transition), diversity and inclusion, human rights and supply chain, community engagement, innovation and social investment.
(G)overnance is concerned with leadership, ethics, integrity, diversity in senior management, ESG reporting, organisational ethics, anti-money laundering and anti-corruption, responsible investment and sustainable finance, cybersecurity and data privacy, responsible taxation, just to name a few.
In each organisation, defining an ESG strategy requires an analysis of each factor’s materiality, both for business and for the most relevant stakeholders, and varies from organisation to organisation.
ESG is a new social contract. It is essential for our future! Whoever adapts the quickest will gain competitive advantages.
