ESG: how small businesses can adopt best practices
esg is the abbreviation of Environment, Social and Governance, a set of practices adopted by companies that act with social responsibility in favor of sustainability. It was the companies that felt that the company should commit to effect It affects the environment and society.
For Daniela Garcia, expert in brand positioning strategy on the Internet and in consumer relations, these are the companies that will know how to move forward. Daniela is also Director of Operations at Institut Capitalismo Consiente Brasil (ICCB), the body responsible for the content and training of leaders who wish to become more aware of their impact on their environment. Then, she gives details on the subject.
What is ESG? How does this affect small businesses?
ESG stands for Environment, Social and Governance or Environmental, Social and Governance Environment. These are essential sustainability criteria for companies around the world. The concept is not new, but it has become operational with the pandemic. Companies must be aware of the impact of their products and services on society and the world. This urgency for sustainability was reinforced with the creation of the United Nations Sustainable Development Goals (SDGs) in 2015, and more recently with the climate crisis. When the topic came up in the financial industry, companies really focused on their responsibility to the planet.
Companies that don’t see their stakeholders – the interest groups around them – can’t move forward. Considering employees, the supply chain, customers and society, it is essential for a company to build good relationships in its environment and to generate shared value. ESG has come to prove that the results of companies should be linked to this collective awareness. All companies will be affected by ESG, regardless of their size. It doesn’t matter when the focus is on society, the environment and transparency.
How can small businesses make sustainability a brand equity?
According to a survey conducted by the Union + Webster agency in 2019, 87% of the Brazilian population prefers to buy from permanent companies and 70% say that they do not mind paying a little more. This consumer is very attentive to the values of a brand. What does this brand do for the environment? Is he involved in forced labor? Does he have a responsibility to his employees? Are your products sustainable? What social projects is she involved in? Any company can make it transparent. Start by showing your purpose, what you do, highlight relevant numbers, hire variety, comment on how you deal with your waste and packaging. Transparency is at the heart of governance.
You criticize companies that talk about ESG and don’t apply it in practice.
Those who are truly committed to ESG show what they are doing, but do it internally first. ESG begins by aligning the goal with a strategic action plan. Next comes communication, which cannot be sustained without a solid internal base, if the company is lying or just marketing, consumers will notice and the brand will suffer doubly. Who has not seen the crisis caused by consumers on social networks?
In times of economic crisis, when the company just wants to survive, is it possible to think ESG?
Considering sustainability standards, it doesn’t cost much; Not seeing can hurt. See the issue of solid waste: Companies are responsible for their waste, their packaging and their destination. Not being careful can lead to fines and reputational issues. A micro-entrepreneur or MEI can sort waste and dispose of it properly. Any action, whether by a natural or legal person of any size, is relevant. Think about diversity and inclusion issues. Diversity is key to creating a more creative environment. Hire people of different genders, races, colors and ages. There is no longer a cost to be transparent with employees and customers. But it gives importance to the brand. In the hands of the government and clearly under the control of the company.
What is conscious capitalism?
It is a movement that emerged in the United States in the early 2000s from a study by Professor Raj Sisodia. Its objective was to verify how companies maintain a high reputation and retain their customers without excessive investment in advertising and marketing. John McKay, CEO of Whole Foods, an American supermarket chain, identified the characteristics and approaches he applied to his business over the years. Together, they founded the movement to bring together companies that identified themselves as conscious capitalists, whose practice rests on four pillars.
The first is the higher purpose, which is why it exists. The second is conscious leadership. Leaders are responsible for serving the purpose of the organization by creating value for their stakeholders and cultivating a conscious culture of trust and care. The third is stakeholder orientation. The company must understand that it is part of a system that has various stakeholders and generates a relationship of shared value with all. Finally, there is conscious culture, which is the incorporation of values, principles and practices embedded in the social fabric of a company. It connects stakeholders to each other and to your goal.