The acronym ESG is increasingly apparent in interviews, webinars and articles, and that's a very good thing. In Portuguese the acronym means: environmental (environment), social and governance (governance) and it is an index that evaluates companies' operations in these three sustainability parameters, offering more transparency to investors.

But what does this have to do with purpose? Everything, and I'll explain why.

According to a study from the Harvard Business School, companies that present high sustainability also perform better when considering accounting return rates, such as, for example, return on equity (ROE) and return on assets (ROA). This shows that the vision “I have a business with sustainable impact OR I have financial gain” is a premise that needs to be deconstructed. When we exchange OR for AND, we arrive at the point: I have a business with sustainable impact AND I have financial gain, and then we come up against the definition of the term “impact business”, which is nothing more: initiatives that, in addition to providing the expected result of your business, generate positive social and/or environmental impact.

Now, think of a company you know that has the “E” in the way it does business. What is your opinion about this company? If compared, with another that is based on the “OR” premise, which one do you believe will be successful in the future, imagining that we have a generation that is increasingly concerned and active in socio-environmental issues? And your company, is it more like “OR” / “AND”?

When I think about the various complex problems we have, such as housing, sanitation, access to food, deforestation, among others, I see purposeful companies as part of the solution, which go beyond just assistance and, with the impact of their business, generate positive values. for the society. In this context of impact, we have interesting examples, such as the initiative Housingpact, which brought together several companies with the mission of supporting startups to address housing problems for low-income populations. An example is the group Natura&CO, which announced a large investment to help preserve the Amazon. Another topic that I see as having potential impact is the new regulatory framework for sanitation (PL 4,162/2019), which among the proposed changes, expands the participation of the private sector in the sector, encouraging the generation of investments and innovations in sanitation, which could consequently have a positive impact on people's lives.

For those who still believe that purposeful businesses are abstract and difficult to disseminate, the BlackRock, the largest investment fund manager in the world, has integrated sustainability into its risk management strategy. More recently, Bradesco Asset Management announced the creation of a ranking to identify the companies in its portfolio that invest most in accordance with the best environmental, social and governance (ESG) practices.

We are in a phase full of changes, where various social and environmental values are being reviewed by society and companies, which have consumers who seek to be increasingly aware, which makes brands look for opportunities in social and environmental issues, outlining an effective sustainability strategy.

Would you like to know more about Sustainability strategies and governance? Our team at ECO Space Foundation can support you!

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