Integration of ESG criteria: a necessary decision

Integrating ESG (Environmental, Social and Corporate Governance) measures into corporate governance seems to be an increasingly necessary decision for companies. Not only the product or service offered, but also how it is produced or carried out, and how a company acts socially, is playing an increasingly important role in consumers’ purchasing choices. But, in addition, these kinds of issues are becoming increasingly important for attracting investment. In fact, according to a survey conducted by Natixis, investments based on ESG criteria are not only of interest to young investors, but the spectrum is expanding over more conventional ones. 

In 2020, the world’s total assets earmarked for socially or environmentally sound investments amounted to €1. 3 trillion. Twenty-four percent of investors did so for the first time that year, while 33 percent of those who had already done so increased their positions.  

Beyond that, a study by Andersen suggests that some countries are considering requiring certain guidelines for companies to access finance. 

The study notes that, in March 2020, the European Commission published its Action Plan for Financing Sustainable Growth, which addressed issues such as the need to include sustainability in the assessment of the suitability of investment instruments, as well as the establishment of greater transparency in sustainability parameters. Specifically, the Plan includes three main objectives: directing private capital towards sustainable investments; integrating sustainability into risk management; and promoting transparency on ESG issues with a long-term perspective. 

In June this year, the EU adopted a regulation aimed at creating a framework to facilitate sustainable investment. It is intended to establish general criteria for identifying sustainable activities. It defines the minimum criteria that companies must meet in order to be considered environmentally sustainable. Although these rules are still being worked out, it is important not to lose sight of all this in order to tackle business development in the medium and long term. 

Either because investors are increasingly considering them in their investment strategies or because legislation will require it sooner rather than later, it seems a good idea to put in place business strategies that consider ESG criteria as one more element of management. 

Having said that, it is important not to forget elements that can help us in our task of demonstrating sustainable management. It’s about communication. In this scenario, it is essential to be consistent when it comes to informing and communicating our commitments and progress in the area of corporate responsibility. It is true that, in recent times, thanks to the changes that have taken place regarding the non-financial reporting of companies, the information that is collected from our activities has been improved. Our interest groups have the opportunity to review what we are doing and to see if what we say corresponds to what we do. But we must go a little further. Transparency must be a guiding element of our usual actions. Our communications and our sustainability reports should serve as management tools and support for business decision-making, to show that we deliver on what we say. 

By Gerardo Miguel, Director at Estudio de Comunicación 


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