In today’s rapidly evolving business landscape, ESG (Environmental, Social, and Governance) has emerged as a critical framework shaping corporate strategies worldwide. With environmental concerns, social issues, and governance standards taking centre stage, ESG is no longer merely a buzzword but a fundamental paradigm shift driving every business to be more responsible, causing a positive impact on its surroundings.

As governments tighten regulations and consumers demand greater transparency and accountability, understanding and integrating the principles of ESG into business operations has become imperative for companies. The problem is that not all companies know exactly where to start or even how to chart a path for this journey. This is where Conexus.Earth comes into play.

In this edition, we’ll explain why ESG is important, regardless of the size or sector of your company. Ready?

Quick facts to convince you that ESG is here to stay (and adopting these practices can bring numerous opportunities!)

• 85% of individual investors consider the ESG factor crucial when choosing a company worthy of their trust. Read more about it.
• 75% of end consumers are willing to pay more for a sustainable product or service. Read more about it.
• CSRD: EU mandates corporate sustainability reporting starting in 2024, aiming to end greenwashing, bolster the social market economy, and set global sustainability standards, impacting nearly 50,000 EU companies and non-EU entities. Read more about it.
• GRI updates Biodiversity Standards to promote global transparency and accountability, enabling organizations to disclose significant biodiversity impacts and meet information demands. Read more about it.
• The Global Sustainable Investment Alliance (GSIA) predicts that by 2025, 50% of global companies will adopt a formal ESG strategy, affecting every corner of the market, even smaller (SMEs) players. Read more about it.
• According to an analysis by Bloomberg Intelligence, ESG assets could reach $53 trillion by 2025, representing one-third of the total assets under global management. Read more about it.

Now that we’re on the same page, how about discussing what’s within our reach today?

By now, you’ve probably realized it’s not an exaggeration to say that the journey to ESG is irreversible. After all, environmental impact reduction, social responsibility, and transparency in business relationships will always exist and evolve (even from laws and regulations established worldwide every day).

However, when it comes to local companies with medium and small operations, it can be challenging to compare potential ESG actions with large multinational corporations that have likely been on this path for years.

That’s why we’ve dedicated this first edition of our newsletter to share with you what we believe is most important in the early stages of the ESG journey. We hope this information brings numerous benefits to you and your company!

Starting with the “E”: Environmental

Most people associate ESG with complicated reporting and million-dollar investments. However, even with limited resources, it’s possible to take the first steps towards a more sustainable and responsible operation (and seize all the opportunities associated with this initiative). Here are 6 important steps to consider:

• Assess your Environmental Footprint: The first step is to understand the environmental impact of your operations. Evaluate the consumption of natural resources, energy, and water, as well as the carbon emissions associated with your activities. Identifying areas of high impact will help prioritize improvement actions. In this aspect, there are specialised consultancies that can assist you.
• Reduce, Reuse, Recycle: Implement resource conservation practices, such as reducing the use of paper, energy, and water. Promote the reuse of materials whenever possible and establish an effective recycling system to minimize waste.
• Adopt Renewable Energy: Consider transitioning to renewable energy sources, such as solar or wind power, to reduce your company’s carbon footprint. Even small changes, like installing solar panels or purchasing green energy, can make a big difference.
• Raise Awareness: Engage your employees and stakeholders in the environmental cause. Conduct training on sustainable practices, such as energy saving and waste reduction, and encourage participation in environmental conservation initiatives.
• Establish Goals and Metrics: Set clear and measurable goals to reduce your company’s environmental impact. Monitor your progress regularly and adjust your strategies as needed to ensure you’re moving towards your objectives. Once again, specialized ESG consulting firms can help you set achievable goals and evolve much faster.
• Attention! Beware of greenwashing: avoid presenting a false image of sustainable practices. Investing in specialized ESG consultancies, adopting transparent metrics, and honestly communicating sustainability efforts are crucial to ensuring environmental integrity and building an authentic reputation for corporate responsibility.

It’s much better, to be honest about where you are today and where you want to go than to sacrifice your company’s image with marketing tricks.

Next step: Nurturing Human Connections

The “S” of ESG stands for Social Responsibility, encompassing the ethical and societal impact of a company’s operations. It delves into how a business interacts with and affects its employees, communities, and broader society. Fostering a socially responsible business entails prioritizing the well-being of stakeholders, championing diversity and inclusion, and actively contributing to community welfare.

Here’s how you can start to think about embedding social responsibility within your organisation:

• Employee Well-being: Champion your employees’ well-being by ensuring fair compensation, comprehensive benefits, and a secure working environment. Embrace policies such as diversity, equity, and inclusion, fostering a workplace that values and respects everyone.
• Community Engagement: Forge meaningful connections with your local community through impactful initiatives like volunteer programs, support for educational and healthcare endeavours, and partnerships with nonprofit organizations. By actively contributing to community welfare, you bolster your social footprint and earn trust.
• Supply Chain Integrity: Uphold ethical standards across your supply chain by collaborating with suppliers who share your dedication to social responsibility. Regularly audit suppliers to uphold labour regulations, fair trade principles, and human rights norms.
• Diversity and inclusion: There is wide evidence today that a diverse team that feels valued regardless of anything is much more stable and productive. Therefore, promoting more inclusive hiring processes and celebrating employees’ differences is not just “the right thing to do,” but a solid strategy for business growth and strengthening the culture.

Responsible Management: The G Pillar of ESG

The pillar of “governance” refers to the practices and policies that a company implements to make decisions, conduct its business, and ensure accountability and transparency to stakeholders.  Effective governance is characterized by integrity, transparency, fairness, and accountability, serving as the foundation for the organization’s long-term sustainability.

Establishing a diversified and dedicated advisory boardis an excellent first step for companies new to governance. This board can provide strategic guidance, oversee the implementation of ESG practices, and serve as a body of accountability for the company’s management.

Additionally, it is crucial to be genuine! Report what your business is doing, your challenges, improvements and commitments. Transparency and open communication with all stakeholders are essential for keeping everyone informed and engaged, promoting a corporate culture of trust and accountability.

So, did you get an initial grasp on ESG? Here are some additional insights that reflect our vision!

That the world is changing we already know. The question now is to understand what our place will be in it. While profits are what keep a company standing along the way, we can also identify other factors that make it valuable to society and profitable in the long run. Among them, we highlight:

• Creating value for all: ESG is not against profitability, quite the contrary. It is the integration between business success and the long-term well-being of the planet and society. Understanding this relationship will facilitate the adoption of ESG practices as natural pillars of the business.
• Purpose and values as a guiding principle: Defining and embracing a clear purpose beyond profit maximisation is essential for companies committed to ESG. A well-defined purpose and values guide decision-making inspire stakeholders, and foster resilience in the face of challenges.
• People as the ultimate goal: Recognizing the importance of human capital and prioritizing the welfare, development, and diversity of employees is essential. Investing in employee well-being fosters loyalty, innovation, and productivity, driving long-term sustainable growth.

Now, we’d like to hear what you think about this content. Please leave your feedback in the comments and let us know if there’s any specific topic you’d like to see in the next edition of Keep On Track by Conexus.earth.

🎧 If you’re still curious to learn more, we recommend listening to the first episode of the Conexus podcast (in portuguese) by clicking on this link – We had a fascinating chat about decarbonisation, sustainability practices and their implications in today’s market.