Have you ever had the opportunity to play a game of chess? At some point, were you curious to understand why this board game manages to be so current in the main schools of strategy, business innovation and, even more recently, in one of the most watched miniseries? Well, some say that chess is a science, and that planning before moving each piece is essential if you don't want to lose the game in minutes.

The then famous queen's gambit, is a way to start a chess game, it is an opening in which you sacrifice a piece to take advantage of it later.

In chess, each player has 16 pieces, and each piece has its own moves and importance. The objective is to capture the enemy king by checkmate. There are still some variations that go beyond the conventional, on what one of the players does not see the board, plays mentally. Or even simultaneous blind chess, in which a player, without seeing the board, plays simultaneously with multiple players at the same time.

Just like anyone who wants to learn the nuances of chess, the term ESG (in Portuguese, Environmental, Social and Governance) is the topic that has been carefully discussed within the different sectors of companies, businesses and society (mainly investors) to understand what the rules of the game, who the players are, how the pieces move, what are the strategies behind each initiative.

In a simplified format, ESG is an organization of initiatives that were already being carried out (or should, as far as possible), mainly in the Sustainability areas, and translated into an objective, transparent, planned and engaged format.

Just like in chess, whatever the pillars (Environmental, Social or Governance), having strategic planning and vision is extremely important. Furthermore, it is not possible to play this board simultaneously, with several players, if there is no clarity and transparency, essential elements to create reputation, bring security and sustainability.

5 chess game strategies to apply to the ESG context

1.    Understand the rules of the game

Like any game you want to challenge yourself in, you need to know the rules. Some companies are starting to create internal areas by hiring ESG specialists, others are taking advantage of their Sustainability structure, adapting and organizing the activities already carried out to present their strategy and reports more clearly. Other companies, which need faster and more emergency actions to meet market demands, are looking for Sustainability/ESG consultancies.

Knowing the urgency of the organization, gathering the knowledge already worked on and mapping its potential and limitations is a differentiator in chess that you should take to business. This knowledge management makes the impacts of your decision more visible in the medium and long term.

2.    How do the pieces move?

Before you start moving the pieces, it is important that you understand what your objective is, how you intend to achieve it and who are the actors with whom you will need to share the board. This is a lesson in chess strategy, which can prevent you from suffering a checkmate in just a few moves.

For this first moment, it is important that you do your homework, understanding which audiences influence your business, making a perception analysis and expectations of what are the relevant topics from the point of view of your value chain.

These assessments allow you to create a Business Impact shared value. So, as happens in some cases of chess, playing mentally and without looking at the board can be a practical and quick way to play, but the risk of losing on the third move of pieces is very high. Therefore, be very familiar with the capacity and characteristics of each piece.

3.    What have you learned from other players?

Indices that relate and integrate environmental, social and governance data are becoming a mainstream business trend. Some indices are known for highlighting companies with strong ESG performance, such as the one created jointly by S&P Dow Jones indexes and B3. In the beginning, these indices only considered a range of a few companies (10%) with superior performance, and these highlights validated only the best in their class, which was very restricted for investors who want to diversify with returns more in line with a more sustainable portfolio of companies. With the launch of the S&P/B3 Brasil ESG Index, Brazil now has an ESG index that maintains breadth and diversification. (B3, 2021)

In addition to these indices, it is important to study market references, whether within your area of activity or even outside your segment. By studying these successes and failures, it will be possible to predict challenges that may be similar (e.g. costs and deadlines for certification, in the case of obtaining green bonds), avoid repeating mistakes and, thus, maximize returns, whether financial or reputational. Benchmarking will make you more prepared to deal with barriers and agility to bring solutions.

4.    Are there any unexplored gaps?

Finding maturity in relation to the organization and ESG strategy, being able to maintain the alignment of its commitment with the dynamic market vision and executing what was planned is already a great achievement and deserves recognition. However, having a careful analysis of unused spaces/gaps on the board to expand the opportunity for new moves can bring prominence among players. There is the possibility of standing out and being an influencer, especially on topics that are already very well worked on internally.

It is quite common to hear from companies that already carry out operations in a very innovative and efficient way, not knowing that they were already making differences in Sustainability. Using scientific comparison methodologies such as Life Cycle Analysis (or Eco-efficiency) can facilitate communication, present more consistent future scenarios and ensure greater transparency, thus reducing uncertainty and insecurity for investors or other target audiences. dialogue.  

In sustainable finance, for example, it is possible to estimate the environmental and economic impacts of applying a green bond to generate energy from photovoltaic technology instead of using energy from the GRID, or even using battery cars instead of a flex fleet (ethanol /Gasoline).

5.    Losing some pieces can be part of the play

Having a systemic vision and, mainly, an understanding of where your most sensitive material topics may be when approaching the ESG topic, is essential before making any publication or developing a strategy for obtaining resources.

Many companies, which are releasing their reports or indicating an investment based on Sustainability goals, are being questioned about transparency, how ambitious this goal was stipulated and whether there is a correlation that produces an evolutionary movement between their indicators.

Therefore, it is important to invest time and resources to map the risks of your moves.

However, it may happen that you have created a plan, following your strategy step by step, mapping the possible risks, and from one day to the next, an essential part (or piece) has been lost. The lesson of chess is that you can recover and act quickly to reshape the direction of the next advance. This ability to react quickly and accelerate recovery after unforeseen events is an important part for anyone who wants to be successful in the game.

“Luck is always on the side of the best player.”

Therefore, the best move, whether in chess or in the ESG business plan, is to play with your strengths and have action plans for themes that are still under development. To do this, you need to constantly evaluate your control data, deeply understand what your value chain expects, how it relates to it and build solid and transparent scenarios. This is the invitation that the ESG agenda proposes to companies and society, so that actions can have more comprehensive, holistic results that generate shared value.

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