{"id":21731,"date":"2023-08-23T11:58:20","date_gmt":"2023-08-23T10:58:20","guid":{"rendered":"https:\/\/www.caiadoguerreiro.com\/?p=21731"},"modified":"2023-08-23T12:00:46","modified_gmt":"2023-08-23T11:00:46","slug":"esg-and-its-impact-on-the-business-world","status":"publish","type":"post","link":"https:\/\/www.caiadoguerreiro.com\/en\/esg-and-its-impact-on-the-business-world\/","title":{"rendered":"ESG and its impact on the business world"},"content":{"rendered":"<p><span data-preserver-spaces=\"true\">ESG is not just a trend but a new paradigm that is redefining corporate policies and strategies, corresponding to the set of criteria used to evaluate the performance of companies in three essential areas:<\/span><\/p>\n<ul class=\"bullet\">\n<li><strong><span data-preserver-spaces=\"true\">E for Environmental:\u00a0<\/span><\/strong><span data-preserver-spaces=\"true\">An area linked to sustainability, the management of natural resources, the reduction of polluting gas emissions and respect for the environment;<\/span><\/li>\n<li><strong><span data-preserver-spaces=\"true\">S for Social:\u00a0<\/span><\/strong><span data-preserver-spaces=\"true\">Related to the fair\/equal treatment of employees (the fight against discrimination based on gender, skin colour, and religion, among other forms of prejudice), the promotion of diversity and inclusion, and respect for human rights, among other issues in this area;<\/span><\/li>\n<li><strong><span data-preserver-spaces=\"true\">G for Governance:<\/span><\/strong><span data-preserver-spaces=\"true\">\u00a0Involves the management and leadership structures in companies, as well as transparency in operations, the fight against corruption, and promoting ethics in business.<\/span><\/li>\n<\/ul>\n<p><strong><span data-preserver-spaces=\"true\">When did the concept originate?<\/span><\/strong><\/p>\n<p><span data-preserver-spaces=\"true\">Although the sustainable theme has been around since the last century, the ESG concept was mentioned for the first time in the &#8220;Who Cares Wins&#8221; report, drawn up by the UN in partnership with the World Bank, to obtain answers from banks on how to integrate environmental, social and governance factors into the capital market. To this end, the former UN Secretary-General, Kofi Annan, invited more than 50 CEOs of major financial institutions to participate jointly in this initiative.<\/span><\/p>\n<p><strong><span data-preserver-spaces=\"true\">Is there ESG legislation?<\/span><\/strong><\/p>\n<p><span data-preserver-spaces=\"true\">The growing relevance of ESG on the global scene has motivated legislators and regulators to promote legislation (or an agenda) that supports sustainable environmental and social practices by countries and specific companies.<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">As it is an inclusive and increasingly relevant acronym, there are dozens of laws and other national and supranational legal instruments (such as actions, agendas, decisions, regulations and directives of the <a href=\"https:\/\/www.cmvm.pt\/pt\/SDI\/sustentabilidade\/Pages\/regulacao_sustentabilidade.aspx\" target=\"_blank\" rel=\"noopener\"><strong>European Union<\/strong><\/a>) that involve ESG-related topics, either exclusively (related to just one of the points) or covering the acronym as a whole (concerning the three pillars).<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">More recently, on July 31 of this year, the European Commission adopted the European Sustainability Reporting Standards (ESRS) by approving the Delegated Regulation, which will be sent for approval to the European Parliament.<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">The <a href=\"https:\/\/ec.europa.eu\/commission\/presscorner\/detail\/en\/qanda_23_4043\" target=\"_blank\" rel=\"noopener\"><strong>ESRS<\/strong><\/a> are just one of the examples of ESG provisions that the EU and other entities have created in recent months, and the trend is precise to increase European demand and control over the behaviour of companies concerning the environment, the treatment of their workers, and other related issues.<\/span><\/p>\n<p><strong><span data-preserver-spaces=\"true\">How do I know if my company is subject to ESG obligations?<\/span><\/strong><\/p>\n<p><span data-preserver-spaces=\"true\">As mentioned above, numerous laws and other instruments regulate environmental, social and good governance issues for companies. In addition, it is necessary to carry out an analysis of the company&#8217;s characteristics, covering specific topics such as:<\/span><\/p>\n<ul class=\"bullet\">\n<li><span data-preserver-spaces=\"true\">Identifying the industry and sector in which the company operates;<\/span><\/li>\n<li><span data-preserver-spaces=\"true\">The analysis of the activities carried out by the company and their risks and impacts associated with the ESG pillars;<\/span><\/li>\n<li><span data-preserver-spaces=\"true\">The location and jurisdiction to which the company is subject;<\/span><\/li>\n<li><span data-preserver-spaces=\"true\">The size and scope of the company, such as its number of employees;<\/span><\/li>\n<li><span data-preserver-spaces=\"true\">Industry benchmarking, comparing your company&#8217;s ESG practices with those of other companies in the same industry or sector; and<\/span><\/li>\n<li><span data-preserver-spaces=\"true\">Monitoring regulatory developments, tracking changes and emerging new ESG-related laws and regulations.<\/span><\/li>\n<\/ul>\n<p><span data-preserver-spaces=\"true\">To determine if your company is subject to any obligations arising from ESG practices, it is advisable to consult a qualified lawyer to avoid sanctions for non-compliance with any rules relating to environmental, social and governance practices.<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">It should be noted that adopting ESG practices is not only limited to legal obligations but also involves the implementation of sustainable and ethical approaches within the company. Even if your company is not legally obliged to follow ESG principles, considering these practices can bring certain advantages to your business.<\/span><\/p>\n<p><strong><span data-preserver-spaces=\"true\">What are the advantages of companies applying an ESG policy?<\/span><\/strong><\/p>\n<p><span data-preserver-spaces=\"true\">For those who think that ESG is just a policy aimed at complying with legal and\/or regulatory provisions, it should be noted that there are also economic and strategic advantages to integrating this concept into your day-to-day operations:<\/span><\/p>\n<ul class=\"bullet\">\n<li><strong><span data-preserver-spaces=\"true\">Improving the company&#8217;s reputation and image:\u00a0<\/span><\/strong><span data-preserver-spaces=\"true\">integrating ESG policy increases a company&#8217;s reliability, reputation and image, strengthening its position in the market and attracting new customers;<\/span><\/li>\n<li><strong><span data-preserver-spaces=\"true\">Access to capital and investors:\u00a0<\/span><\/strong><span data-preserver-spaces=\"true\">based on the company&#8217;s reputation, the adoption of ESG practices also brings more significant attraction for investors, who direct their resources towards companies aligned with ESG principles;<\/span><\/li>\n<li><strong><span data-preserver-spaces=\"true\">Attracting and retaining talent:\u00a0<\/span><\/strong><span data-preserver-spaces=\"true\">employees, especially younger generations, are more likely to work for companies that demonstrate a commitment to ESG values, thus increasing their ability to attract and retain talent.<\/span><\/li>\n<\/ul>\n<p><span data-preserver-spaces=\"true\">However, as much as the implementation of ESG policy can bring advantages, the progressive increase and complexity of the new European rules on this matter, for some, make life difficult for companies which are unable to keep up with the vast number of obligations associated with ESG.\u00a0<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">In addition to this difficulty in implementation, there is also the existence of fraud, such as the phenomena of Greenwashing, Socialwashing, Pinkwashing, Bluewashing, and ESG Washing, which certain companies have put into action.<\/span><\/p>\n<p><strong><span data-preserver-spaces=\"true\">But what are these phenomena?<\/span><\/strong><\/p>\n<p><span data-preserver-spaces=\"true\">Greenwashing consists of companies promoting themselves as &#8220;ecologically&#8221; correct when their services and\/or products do not correspond to this. In other words, it&#8217;s a misleading perception of support for the environment by certain companies, which call themselves &#8220;eco-friendly&#8221; but are not.\u00a0<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">Also similar is Socialwashing, which, rather than corresponding to misleading advertisements about the environment (like Greenwashing), concerns advertisements and marketing tactics that exaggerate or distort a company&#8217;s social practices.<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">There are also other similar phenomena, such as Pinkwashing, which refers to false advertisements defending LGBTQIA+ rights (when, in fact, they don&#8217;t adopt any practices to do so), Bluewashing, which consists of companies signing up to the UN&#8217;s global pact to associate their name with that organization, and ESG Washing, referring to the misleading use of ESG standards and metrics, among other phenomena whose aim is to manipulate the public&#8217;s perception of companies&#8217; sustainability, social responsibility and governance practices.<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">For companies that practice any of these phenomena, but especially Greenwashing, in addition to harming the company&#8217;s image and alienating customers and investors, these frauds also entail (social) responsibility for violating legal requirements. By way of example, developing Unfair Commercial Practices such as Greenwashing violates <a href=\"https:\/\/eur-lex.europa.eu\/legal-content\/PT\/TXT\/?uri=celex%3A32005L0029\" target=\"_blank\" rel=\"noopener\"><strong>Directive 2005<\/strong><\/a>\/29\/EC of the European Parliament and of the Council of May 11, 2005, which aims to ban deceptive commercial practices (by act or omission) and aggressive commercial practices, thus protecting consumer rights.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>ESG is not just a trend but a new paradigm that is redefining corporate policies and strategies, corresponding to the set of criteria used to evaluate the performance of companies in three essential areas: E for Environmental:\u00a0An area linked to sustainability, the management of natural resources, the reduction of polluting gas emissions and respect for [&hellip;]<\/p>\n","protected":false},"author":8,"featured_media":21855,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[1],"tags":[],"class_list":["post-21731","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-sem-categoria","areas-natural-resources-and-mobility-en"],"acf":[],"jetpack_featured_media_url":"https:\/\/www.caiadoguerreiro.com\/wp-content\/uploads\/2023\/08\/cover.png","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/www.caiadoguerreiro.com\/en\/wp-json\/wp\/v2\/posts\/21731","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.caiadoguerreiro.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.caiadoguerreiro.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.caiadoguerreiro.com\/en\/wp-json\/wp\/v2\/users\/8"}],"replies":[{"embeddable":true,"href":"https:\/\/www.caiadoguerreiro.com\/en\/wp-json\/wp\/v2\/comments?post=21731"}],"version-history":[{"count":6,"href":"https:\/\/www.caiadoguerreiro.com\/en\/wp-json\/wp\/v2\/posts\/21731\/revisions"}],"predecessor-version":[{"id":21864,"href":"https:\/\/www.caiadoguerreiro.com\/en\/wp-json\/wp\/v2\/posts\/21731\/revisions\/21864"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.caiadoguerreiro.com\/en\/wp-json\/wp\/v2\/media\/21855"}],"wp:attachment":[{"href":"https:\/\/www.caiadoguerreiro.com\/en\/wp-json\/wp\/v2\/media?parent=21731"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.caiadoguerreiro.com\/en\/wp-json\/wp\/v2\/categories?post=21731"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.caiadoguerreiro.com\/en\/wp-json\/wp\/v2\/tags?post=21731"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}