ESG stands for Environmental – Social – Governance. These are guidelines that guide financial companies towards the challenges and social objectives of the 21st century. Initially conceived in 2004 in the UN global pact in partnership with the world bank, the ESG strategies are about 03 pillars that must work in perfect harmony so that companies can generate sustainable growth, and be aligned with global goals.
Next, we will show what each of the pillars means, and how important it is within organizations.
E – Environmental
The first ESG pillar concerns the good environmental practices that an organization must-have in the midst of its processes. These are guidelines that aim to assist in the planning and development of actions that can generate less impact on the environment through:
In addition to these measures, it is the direct role of large organizations to create strategies to contain global warming, deforestation, and fires, in addition to preventing water shortages.
S – Social
The letter S refers to the responsibilities of these organizations in the social aspect of their communities. It is the role of organizations to generate environments that favor both the physical and emotional health of their employees. Also in the social aspect, social actions aimed at the community and external public that are part of the organization are described, in addition to encouraging diversity in their environments, and laws to protect the use of data.
G – Governance
G – Governance
The last pillar of an ESG strategy is the relationship between administration and government. This pillar concerns the general guidelines, both internal and external of a corporation. Good practices are:
- Anti-Corruption Policies
- Fraud prevention
- Transparency
The Importance of ESG Strategies
The concept is on the rise due to numerous events that have highlighted the problematic role of industries and institutions in their communities, and that each day they are under increasing pressure to align with ESG strategies.
The process of adapting to this global trend is already underway in several companies, and the expectation is that the process will gain more and more strength and notoriety among financial institutions.
According to data from Statista, (search for real source) the ESG portfolio shows growth compared to the years 2018 and 2019, with emphasis on Europe, Canada, and Asia, as shown in the chart below.
Adapting to new needs is a key point for organizations that want to remain competitive in increasingly volatile markets. Using ESG strategies is a way to attract investors looking for companies committed to a more sustainable, humane, and secure future.
About the Author: Andre Andrade
