First of all, it is important to clarify that it is no simple task to measure the degree of compliance of each company and what practices are required in each segment of activity to meet ESG objectives and factors. The methodologies are diverse and the study of this science is wide-ranging.
These are changing criteria and a continuous effort on the part of companies and their managers, but keeping in mind the pillars of ESG can help to outline the strategies needed to adapt the company to this new reality.
The pillars are: Environmental, Social and Governance.
Environmental factors
Sustainability in the production chain and internal policies for the use of natural resources, greenhouse gas emissions (CO2, methane gas), energy efficiency, pollution, waste management, effluents and biodiversity.
Possible measures: even if the business activity is not directly involved in environmental issues, it is possible to adapt environmental factors in the company.
Check out some examples!
- Adopt an environmental management policy, defining objectives and targets, such as reducing water and energy consumption, minimizing waste generation and greenhouse gas emissions;
- Implement energy efficiency practices by adopting technologies and processes that reduce energy consumption;
- Promote the use of renewable energy sources, such as solar, wind and hydroelectric;
- Establish waste management practices that include the reduction, reuse and recycling of materials, as well as the proper disposal of hazardous waste;
- Adopt natural resource conservation measures, such as the protection of sensitive ecosystems, the preservation of biodiversity and the sustainable use of natural resources;
- Encouraging the adoption of sustainable practices among suppliers and clients, by defining environmental criteria and requirements for selecting and evaluating business partners;
- Fostering a culture of environmental awareness among employees by adopting education and training programs on sustainability.
Social factors
Labor policies and relations, inclusion and diversity, employee engagement, attracting and retaining talent, employee well-being, worker health and safety, workforce training, human rights, relations with local communities and social responsibility, privacy and protection of personal data.
Possible measures: seeking social equality within the company’s reality, enabling gender equalization among employees, creating awareness campaigns on issues related to social equality and, eventually, supporting social causes.
Check out some examples!
- Adopt inclusion and diversity policies that promote equal opportunities and respect for differences in all areas of the company;
- Establish employee training and development programs that enable the acquisition of new skills and knowledge;
- Fostering a safe and healthy working environment by adopting accident prevention, occupational health and safety measures;
- Adopting fair remuneration practices and benefits that guarantee the well-being of employees, promoting motivation and job satisfaction;
- Establish clear criteria for selecting and evaluating suppliers, which take into account aspects of social responsibility, such as the promotion of fair work, respect for human rights and environmental protection;
- Promoting community engagement and dialogue with society, through social responsibility projects and initiatives that contribute to the development of the communities in which the company operates.
Governance factors
Governance policies, ethics and conduct, independence of the board of directors, management remuneration policy, accountability of directors and shareholders, diversity and plurality in the composition of boards and committees, structure of audit and fiscal committees, ethics and transparency, among others.
Possible measures: firstly, if the company does not have one, it is essential to create a real governance policy, with which the partners will be committed and engaged. The governance factor involves adopting practices that guarantee ethical and transparent management, that take social and environmental responsibility into account, and that are capable of generating long-term value for all stakeholders.
Check out some examples!
- Establish a clear and efficient governance structure, including the creation of ethics, auditing and risk committees, as well as clear responsibility and accountability guidelines;
- Ensure transparency and access to information through the publication of sustainability reports and information on the management of risks and opportunities related to environmental, social and governance aspects;
- Adopt risk management practices to identify, assess and manage the risks and opportunities associated with environmental, social and governance aspects;
- Foster a culture of ethics and integrity in the company by adopting codes of conduct, training and incentive programs for responsible and ethical conduct;
- Establish clear criteria for selecting and evaluating suppliers, clients and business partners, taking into account aspects of social and environmental responsibility;
- Establishing targets and performance indicators related to environmental, social and governance aspects, with the aim of continuously monitoring and improving the company’s performance in these aspects.
Companies that adopt ESG factors are increasingly present in the market and on the agenda of investors concerned about ESG criteria. On the other hand, organizations that don’t have the capacity to adapt will quickly lose competitiveness in the market and give way to other players.
Disclosure of ESG practices is also essential for the company to achieve visibility in the area.
