ESG CULTURE: STRATEGIES AND INITIATIVES FOCUSING ON THE ENVIRONMENTAL PILLAR

Understand how to adhere to business practices aimed at ESG's environmental pillar.

por NTICS | 10 de August de 2020

E.S.G stands for the words: Environmental, Social and Governance and is an index that establishes a structure to assess the impact of a company’s ethical and sustainability practices on its performance and financial operations.

Initially, the ESG structure was used only by investors to determine suitable investments. Currently, it gains more recognition among all types of investors, due to the greater attention of governments and regulators to these factors and to a greater public awareness of the environmental and social influence of companies.

Last week we talked about ESG focusing on Governance. T week, the article focuses on the Environmental pillar (Environment). The environmental pillar is linked to the company’s influence on the environment and its ability to mitigate risks that can harm natural resources. This factor generally assesses the company by the use of energy, waste generation, level of pollution produced, use of resources and treatment of animals.

The company’s environmental policies and the ability to reduce environmental risks can directly influence its financial performance. More governments around the world are introducing strict environmental policies and a company’s inability to meet standards can result in significant losses. In addition, the irresponsible environmental policy damages areas and companies operations, consequently limiting its operational capacity.

How to measure environmental impacts and sustainability indexes? Sustainability indexes are instruments to measure a company’s responsibility in social and environmental areas. The more the company considers these pillars in its development and operations, higher is the index.

There are basically three sustainability indices that have the greatest impact and representativeness at the international level. In the USA, it is the Domini 400 social index; In Europe, the two most popular are the Dow Jones Sustainability Indexes and the FTSE4Good.

Companies can also structure their sustainability indexes by prioritizing Sustainable Development Goals (SDGs) and also joining the United Nations Global Compact. Prioritization can be done through the Global Compact Impact Assessment website. After this definition, the challenge is to deliver these SDGs prioritized in corporate actions and practices internally and to surrounding communities.

Check out 03 initiatives that embrace the SDGs:
01) Invest in social and environmental responsibility projects that work with the company’s priority SDGs. How? Through incentive laws or marketing budget. There are several projects that take place in schools, public squares, for the community around the company that embraces the Sustainable Development Goals, transforming the student into the protagonist of transformation and change. Want to understand more about these projects? Check out the NTICS Projects website!

02) Promote internal actions within the organization that work with prioritized SDGs and also encourage employees to take this knowledge and practices outside the company as well, implementing in their personal lives.

03) Make a commitment to become a signatory company to the United Nations Global Compact. The largest corporate sustainability initiative in the world, the Global Compact is a call for companies to align their strategies and operations with 10 universal principles in the areas of Human Rights, Environment, Labor and Anti-Corruption by developing actions that contribute to solving society’s problems and challenges .

In addition to prioritizing the SDGs, another initiative directly linked to the environmental pillar is to neutralize the company’s “carbon footprint” through the Carbon Footprint Calculator. What does that mean? The carbon footprint is a measure that calculates the equivalent carbon emission in the atmosphere by a company, person, activity or government. Compensation or neutralization is done through the purchase of carbon credits (the emission equivalent calculated on the website above) or through the planting of an estimated number of trees.

Finally, the last initiative to ensure more sustainable operations is through the annual publication of a “Sustainability Report”. One of the main tools of voluntary initiative that a company adopts to report and be accountable to society and other interested parties about its performance and its sustainable practices. An important communication and management tool.

Check out 03 advantages of developing the Sustainability Report:
1) A management strategy focused on the future, based on consistent information of the positive and negative impacts of sustainability, both caused by the company and by external factors such as: climate change or human rights issues.

2) Improvement in the company’s dialogue with shareholders, which helps to identify risks and opportunities related to sustainability.

3) Assistance in changing the mindset looking for what makes business sense in a dynamic world, where not only the financial scope, but also the economic, social and environmental matters.

Adopting sustainable practices and looking at the environmental pillar is a strategic advantage for the company, with investors, consumers and the surrounding community. One path to this area is to become a signatory company to the Global Compact by seeking an office in your country and city and by signing the ambitions for the Sustainable Development Goals (SDGs). Would you like to understand more about how your company can adopt sustainable practices while improving environmental performance? Contact us!

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