Understand what ESG (Environmental, Social and Governance) is and learn how it can revolutionize the management of your company!
The acronym ESG corresponds to the initial letters of Environmental, Social and Governance. There are 3 topics that have been increasingly important as criteria for decision-making in companies.
The acronym appeared in 2004, in a publication of the UN global pact in partnership with the world bank. The ESG emerged, then, with the objective of inserting environmental and social issues in companies.
This is because studies show that companies that adopt better environmental, social and governance practices see many positive impacts, such as greater profit and even an improvement in the company’s valuation in the market.
In other words, ESG helps companies make better decisions when investing or promoting process improvements. Which is very well received by customers, shareholders and society.
Understanding each area of ESG (Environmental, Social and Governance)
To better understand the proposal of each ESG area, we need to contextualize what each letter of the acronym means: Environmental, Social and Governance. Thus, we can understand what the objectives are and what each area can promote in companies.
E for Environmental
In this area, we carry out an assessment of how the planning and development of actions are aligned with sustainability, preservation of resources and minimization of environmental impacts.
Here, we analyze how the company is concerned, for example, with reducing water or air pollution (if this applies to its activities), or with how the use of resources can be optimized in the manufacture of its products and/or or provision of services.
S for Social
Here, we analyze the development and application of the company’s actions in their communities and where they are located.
We seek to understand how internal and external audiences are taken into account to build a fairer and more responsible organization. What creates value around the company. Organizations that have strong social appeal, are concerned with data protection, diversity in the team and with employees, for example.
G of Governance
Our last “acronym” refers to the company’s concern to adopt good management practices. The governance area is related to the attention that the company gives to the management of its business and its relationship with the interested parties.
Here, there is a special focus on ensuring that company rules (whether internal or external) are actually enforced. Likewise, there is a concern to create ways to constantly assess the validity of these rules.
Why implement an ESG in your company?
With the pandemic, many people and companies have started to rethink the way they are dealing with the world and our resources may be limited.
In this way, everyone is worrying more about the effects caused by their companies. Everyone is looking for ways to lessen the impacts of harmful actions on the environment and address social and labor issues more carefully. And ESG has a very strong focus on this point.
In addition, companies that are concerned with good environmental, social and governance practices are less likely to suffer legal problems related to these three areas. Which translates into less financial and reputational damage.
Finally, organizations that adopt ESG practices seek to analyze their progress through three stages, as “each acronym” has criteria that the company should pay attention to in order to better understand the benefits of an ESG. This guarantees a greater scope of management and a more complete monitoring system.
Is there ESG (Environmental, Social and Governance) certification?
There are no specific certifications for ESG, however we can find ISO standards that support each of its branches (Environmental, Social and Governance). They can help us direct efforts and guide us on how to apply the rules in our companies.
For example, ISO 14001 can be used to organize the company’s environmental area. And it presents the requirements of an environmental management system that allows an organization to develop structures for the protection of the environment.
ISO 26000, on the other hand, can be used to address social issues. This is a voluntary standard for companies that seek organizational performance in relation to the society in which it operates and its impact on the social environment.
For governance, ESG can be supported by ISO 37000, which is a new standard and helps to create an environment of good governance in a company, bringing to light a supervised and responsible management system to achieve its purpose in an ethical and responsible way.
So, how about starting to think ESG for your company?
This is a topic that is still under development in the market and at the moment of discovery by many professionals, but which has been gaining a lot of strength.
After all, acquiring sustainability in organizations is seen as a competitive advantage. Many companies are recognizing sustainable means as a way to improve their reputation, reduce costs and retain their customers.
Thinking about ESG factors can transform your company’s management. With them, several good practices will emerge and help you to prosper in a more ethical, fair and sustainable way. So, how about starting to think about transforming management by implementing ESG in your company?