Although the acronym has only three letters, it translates into three weighty themes that should be incorporated into the daily operations of all companies: environmental, social and governance.
Initially emerging as a trend, ESG has firmly entrenched itself in the corporate world due to its practices related to environmental preservation, social responsibility and corporate transparency. ESG practices have become a significant differentiator in the market, attracting more investors to these businesses.
Moreover, ESG contributes to reducing legal, labor and fraud-related risks, cutting operational costs, enhancing productivity and fostering customer loyalty among those who value sustainable products and services. It also positively influences brand reputation, facilitates access to green credit lines, and aids in talent attraction and retention, among other benefits.
The biggest mistake in this area is believing that it only pertains to the environment, neglecting the other letters of the acronym and thus assuming that the company is already doing everything possible to meet its criteria.
However, ESG also refers to the practices and principles adopted by the company concerning its stakeholders, including employees. In other words, it involves compliance with labor rights, prioritizing health and safety in the workplace, and supporting diversity and inclusion. Another aspect considered is how the company manages its processes, with a focus on transparency.
And, like other themes related to business administration and management, ESG has been heavily influenced by technology, artificial intelligence, the Internet of Things, and all other innovative aspects that provide greater transparency and profitability for the business.
Given this, what are the ESG trends for the coming years?
– The use of generative artificial intelligence will be widely debated, especially in the field of cybersecurity.
– A study conducted by the consulting Deloitte revealed that 94% of Brazilian companies have recognized diversity, equity, and inclusion practices as beneficial to their businesses. They significantly contribute to innovation, value generation, and workforce quality. Consequently, this is likely to become even closer to reality in practice.
– And since we’re on this topic, the importance of employee well-being comes into play, making it crucial to listen carefully to their needs to promote physical and mental health.
– Due to market recognition of value, companies can prepare for the growth of ESG evaluation and engagement mechanisms, considering not only the implementation of best practices but also the entire sustainability management process.
– As a consequence of the previous item, the implementation of committees for constant monitoring of the company’s operations’ impact on environmental, social, and governance issues will be necessary. This includes data collection and analysis of KPIs (Key Performance Indicators).
– Speaking of data collection, digital transformation for sustainability has never been more prominent. The incorporation of innovative technologies and enhanced measurement and reporting software becomes increasingly necessary to assess the real impact of sustainable actions.
Interact’s solutions
Interact offers a comprehensive solution for managing your ESG program. With it, you can systematize strategic and operational planning in your company, with integrated visualization of corporate results through strategic maps, performance indicators, and action plans.
With it, you will strengthen the principles of corporate governance, adding value to your business and enhancing your brand’s reputation.
Author:
Bianca Wermann
Journalist, Communication and Marketing Analyst at Interact Solutions.