By: Leslie Ortiz Martinez
The term ESG corresponds to the words in English Environmental, Social and Governance, which arises in 2004 derived from a work proposal of the Secretary of the United Nations, having as predecessor the term SRI (Socially Responsible Investment). ESG is understood as the set of criteria that lay the foundation for integrating environmental, social and governance objectives that make a company sustainable and safe to receive investments.
The purpose of ESG criteria in a company is to communicate to the public its intention to positively impact its environment in addition to generating profits, with results easily identifiable by those shareholders who seek to invest in companies that reflect their values and beliefs. This has led to the creation of green bonds, and indexed products.
Each area is of great importance to achieve this purpose, so it is useful to analyze them separately, since each one includes a wide variety of matters that must be pursued or fulfilled to achieve the sustainability of the company.
Broadly speaking, environmental criteria refer to those activities that have a positive impact on the environment, not only focused on reducing climate change, such as through the use of renewable energies, reducing the generation of hazardous waste, or air and water pollution, but also in the care of the origin of their raw materials, taking into account biodiversity such as the use of organic products.
On the other hand, the social criteria cover a large number of aspects within which those focused on the field of human rights and labor relations stand out, such as innovations in organizational culture, taking into account the well-being of its employees, where competitive salaries come into play along with attractive benefits, recruitment policies, in which diversity and inclusion are practiced, among others. Another outstanding aspect refers to the management of relations with the communities where the company operates, considering their needs and opinions, achieving a healthy coexistence.
Finally, the governance criteria, as the name implies, are those related to the mechanisms of corporate governance of companies, focusing on the decisions made from the highest commands, which are related to shareholder rights, customers, employee remuneration and tax strategies among others. Its purpose will be that all these decisions are taken under the broadest transparency, complying with the ethical code of each company, and seeking the integral well-being of the company.
In conclusion, the correct application of these criteria has become a benchmark of quality for companies, increasing their chances of success against their competition, as well as a way to strengthen their public image.
