Learn why the creation of an ESG Regulatory Framework is essential for sustainability in Brazil

Brazil is close to ensuring a regulatory framework of ESG (Environmental, Social and Governance) for Sustainable Development (MRESG). Organized by the Global ESG Institute, the Brazilian Association of Institutional and Government Relations (Abrig) and the ESG Movement in Practice, the ESG20+ Public Consultation has just been launched, with suggestions for the structuring of environmental, social and governance standards.

The proposal should be available by the end of March, allowing the participation of companies, experts in ESG practices and civil society as a whole. The intention is to establish a material that can be used for bills and also public and private guidelines, ensuring greater security to the productive sector.

The adoption of ESG practices is a global requirement. Many countries and economic blocs already have their regulatory frameworks developed, and the European Union was the pioneer. In Brazil, with the intention of strengthening governance and standardizing information, the ABNT PR 2030 2030 & ESG, launched on December 14, 2022, contains some basic guidelines regarding the incorporation of sustainable practices by companies. However, it is not enough.

The creation and implementation of a framework for ESG in the national territory is fundamental. By establishing clear standards for companies and investors, it ensures greater legal certainty, minimizing uncertainties and also encouraging sustainable practices that can be developed in the long term. By defining unified criteria for the measurement and disclosure of practices, standardization and greater transparency are guaranteed. greenwashing (“lavagem verde”), defined as the misleading promotion of environmentally friendly corporate practices.The practice is considered a crime, according to article 37 of Law 8078/90 of the Consumer Protection Code.

The regulatory framework also attracts new investments, as it facilitates access to both national and foreign capital. This is why, in recent years, investors have prioritized organizations that are well aligned with good practices. These companies tend to be more sustainable, resilient and profitable in the long term, being less exposed to risks, gaining greater public confidence and presenting more stable performance in the stock exchange, as well as less volatility. It is not just an ethical issue, investing in companies committed to ESG is a very smart financial strategy.

Finally, unified criteria make Brazilian companies better adapted to international requirements, which contributes to the facilitation of exports and closing strategic partnerships; and encourage the development of business actions capable of minimizing environmental impacts and promoting social development, contributing to a more balanced economic growth. Thus, society as a whole is benefited!