ESG: capitalism beyond profit

“The investor's objective is the profitability achieved by profit, however, this goal, increasingly, cannot be achieved at any cost”

Edson Vismona, Exame Magazine / Compass
01/02/2021

We have seen, with increasing prominence, in the stock market and in the Brazilian corporate environment the acronym IT G, which represents indicators that guide investors in assessing the conduct of companies in areas considered strategic: environmental, social and governance (environmental, social and governance).

Thus, the initiatives that companies should encourage to demonstrate that their actions are guided by respect for the environment are pointed out; the adoption of social policies that involve the internal positions of inclusion and coexistence of employees; for the relationship with the community; and also through corporate decision-making processes, encouraging the adoption of values ​​related to control, dignity, ethics, transparency and legality. With a focus on these actions, companies can attract funds allocated to global investment funds, which turn over trillions of dollars.

This movement was encouraged in 2015 by the UN World Development Agenda (Global Agenda 2030) - a commitment signed by 193 countries, including Brazil - determining the joining of forces in favor of a World Sustainable Development Agenda, which must be fulfilled by the year 2030, contemplated in 17 Sustainable Development Goals, which were divided into 169 goals.

The objectives range from poverty eradication, health and well-being, education, actions against climate change, clean energy, decent work and economic growth, to reducing inequalities, peace, justice and effective institutions. A list of actions of this magnitude, divided into 169 goals, could be considered as another utopia within the scope of the United Nations, which would remain on the plane of duty, without an effective application.

However, these objectives attracted the attention of global investors who understood that companies could not be left out of this process, the demands, the expectations of society have changed, demanding more strongly that this agenda be for real and that it involves governments, NGOs and the sectors productive.

Today it is normal for a company, which does not need to be large, to demand investments, to be asked whether it meets the goals of the UN Agenda 2030. The so-called responsible investment funds already handle 31 trillion dollars, which represents 36% of the total financial assets managed in the world.

ESG indicators involve topics of great importance, however, I note, in the journalistic articles that have been explaining these indicators, that the “E” (environmental) has been highlighted in greater detail, to the point of “S” and “G” being in second plan. In fact, diversity and inclusion actions have assumed relevance, as have integrity programs, but the attention that is presented in the reports has been more focused on the environmental issue.

Initiatives to increase the participation of women in Boards of Directors; inclusion of professionals from different backgrounds, cultures, genders and races; combating harassment; encouraging actions to respect the consumer, with the adoption of ombudsmen; the development of integrity programs and the fight against any illegal practice represent the evolution of concepts and principles of the corporate environment. Thus, the points related to Social and Governance should also be highlighted, composing a balance between the desired indicators, since they represent a whole that should not be dissociated.

This evolutionary sense is very interesting. The investor's objective is the profitability achieved by the profit, however, this goal, increasingly, cannot be achieved at any cost. Society and consumers demand new postures from companies, which must meet ESG commitments that go beyond basic profitability postures: low cost, high productivity, attractive price, logistics, sales channels, marketing policy, tax adequacy.

UN Secretary General Antonio Guterres said that the “Global Agenda 2030 is our Global Declaration of Interdependence”. I dare to affirm that, with this advance stimulated by investment funds, this Agenda represented a meeting that recently could be considered unusual: capitalism with human rights, enabling the generations of Human Rights to be inserted in the strategic vision of companies. Certainly a necessary stimulus for renewal and innovation, with inclusion, compliance and sustainability.