The ESG (Environmental, Social and Governance) theme has never been so popular in Brazil as it is now. This is because the ESG20+ Public Consultation was launched in the country, with suggestions for structuring environmental, social, and governance standards. Available until the end of March, it should lead to a fundamental regulatory framework to standardize practices, ensuring that all public and private companies follow clear and uniform criteria.
In today’s world, ESG has been widely adopted for investors’ decision-making. They tend to prioritize companies that adopt good practices because they generally present lower risks, are more prepared to face regulatory challenges, and demonstrate a commitment to long-term sustainability. All these factors can lead to greater profitability and financial stability, as well as meet the demands of consumers and stakeholders for administrative transparency, ethics, and responsibility.
ESG is synonymous with strength, lower costs, better reputation, and greater resilience amidst uncertainties and vulnerabilities. Many countries and economic blocs – such as the European Union (considered a pioneer), the United States, and Canada – already have developed regulatory frameworks. Thus, the existence of unified criteria and organizations’ compliance with them will enhance Brazil’s representation in the foreign market, increasing its global competitiveness.
All companies, regardless of size, are touched by governance, which is nothing more than ethics and transparency in administration. In this way, all are influenced by ESG. One of the twenty principles put under scrutiny in the ESG20+ Public Consultation, and also one of the most important, concerns the simplification of legislation so that small organizations have better conditions to adapt to the norms.
Often, in the current reality, small companies cannot have a board of directors composed of governance specialists. However, it is important that the business owner or any other board member be capable of studying and understanding the guidelines alone. Careful internal auditing increases legal security, reduces the risk of fines, and prevents the company’s image from being tarnished in the market. Regarding large entities, the presence of one or more ESG specialists within the board of directors is essential.
The existence of criteria encourages companies to adopt practices that minimize impacts, promote social justice, and ensure transparency, resulting in sustainable and balanced economic growth. Recently, in an interview with the press, the executive director of the Brazilian Network of the ESG Global Pact, Carlo Pereira, was very assertive in commenting that ‘ESG is not an evolution of corporate sustainability, but corporate sustainability itself’.
According to recent data released by PwC, the estimate is that, at the beginning of this year, 57% of mutual fund assets in Europe are in funds that consider ESG criteria. This corresponds to $8.9 trillion. Another interesting fact, disclosed by the same institution, is that 77% of institutional investors surveyed by PwC themselves plan to stop acquiring products from companies that do not adopt good practices by 2027.
ESG20+
Anyone interested can participate with suggestions and opinions in the ESG20+ Public Consultation, which will be available until the end of this month of March. It is organized by the Global ESG Institute, the Brazilian Association of Institutional and Government Relations (Abrig), and the ESG in Practice Movement.
The interinstitutional initiative aims to structure environmental, social, and governance standards to guide public bodies, society, companies, and investors in Brazil. The goal is to simplify the application of ESG principles, as well as to define unified criteria for the measurement and disclosure of practices.
