Fábio Coletti Barbosa, a Brazilian business administrator and professor with a career in large corporations, once said that there are three reasons why people embrace the ESG pillars: conviction, convenience and constraint. And this within an irreversible and growing scenario in which, according to him, there will be no future for companies that are not connected to the changes represented by new consumers, investors and professionals who look closely at Environmental, Social and Governance issues.
Self-explanatory, the 3 “C’s” are certainly present in corporate decisions regarding the ESG agenda.
Some decide to follow this agenda and implement it out of conviction – which is the right thing to do because, as the professor mentioned, this is an extremely relevant issue with no turning back.
In these cases, there is a belief in the relevance, reality and importance of the issue, concrete attitudes are adopted, and the investment is not necessarily linked to a financial return – which is sometimes still a conceptual impasse for some executives.
Complying with ESG practices for convenience has also been the choice of some, who align good Environmental, Social and Governance practices with the expectation of recognition by their stakeholders, society and consumers.
The adoption of these good practices guarantees the implementation of one or more real actions aimed at the ESG pillars, which consequently generates positive socio-environmental repercussions. The practice of ‘win-win’ for legal activities sometimes induces concrete, valid actions and is reasonably acceptable.
However, it is different for those who embrace the ESG pillars out of constraint, and that is because they usually do so after a situation of non-compliance has occurred.
They are embarrassed because, following an inspection that identifies a violation of their employees’ human rights, they sign a conduct adjustment agreement with a public administration body. In the same way, when it comes to the environment, they agree to adopt a specific measure to remediate or compensate for environmental damage. Or, after a major accounting scandal, they hire a renowned consultancy to implement corporate governance practices that are well regarded by the market.
Be aware: companies that move out of constraint, as a rule, lose the credibility of their actions, and the effects of their efforts are reasonably diminished.
But the corporation that learns from the pain (or mistakes) of others, rather than its own, is usually the wisest.
So, which of these 3 C’s motivates your company to embrace the ESG pillars?