Sustainability has moved from being a secondary concern to taking center stage in strategic decision-making within the corporate world. Terms such as transparency, environmental impact, and social responsibility have become part of boardroom discussions, financial department strategies, and business expansion and growth plans.
In this context, the concept of ESG – Environmental, Social, and Governance has become an essential reference for assessing a company’s sustainability and resilience.
The origin of the ESG concept
The term ESG officially emerged in 2004 in a report by the United Nations Global Compact in partnership with the World Bank, titled "Who Cares Wins". The document highlighted how environmental, social, and corporate governance factors could affect companies’ and investors’ long-term financial performance.
From then on, institutional investors, regulatory bodies, and corporate leaders began to recognize that incorporating ESG criteria could improve risk and opportunity management, while generating sustainable value.
What is ESG in practice?
The ESG concept is based on three pillars:
Environmental: evaluates how the company addresses environmental issues such as:
- CO₂ emissions
- Use of natural resources (water, energy)
- Waste and recycling
- Biodiversity protection
- Climate risk management
Social: analyzes the company’s relationships with employees, communities, and society:
- Labor rights and workplace safety
- Diversity, equity and inclusion
- Engagement with local communities
- Responsible supply chain
- Data protection and privacy
Governance: refers to ethical and responsible management practices:
- Transparency in reports and indicators
- Combating corruption and fraud
- Board structure and independence
- Compliance and audit policies
- Aligning executive compensation with sustainability goals
Why is ESG Important for Businesses?
Companies that integrate ESG criteria into their strategic management gain numerous tangible and intangible benefits:
Competitive Advantages
- Access to capital: Investment funds and banks prioritize companies with strong ESG performance.
- Brand appeal: Consumers and partners value brands with purpose and responsibility.
- Risk resilience: Reduced exposure to fines, environmental disasters, and reputation crises.
- Operational efficiency: Resource savings and increased productivity through sustainable practices.
Governance Advantages
- Greater transparency and stakeholder trust
- Improved risk management and decision-making
- Strengthened organizational culture
Long-term value
Studies show that companies with strong ESG performance deliver higher risk-adjusted returns, with lower volatility and greater long-term valuation.
How to become an ESG-driven company
Adopting ESG practices is not simply about creating a sustainability department—it’s a cultural and strategic shift. Key steps include:
- ESG risk assessment and mapping
Evaluate the specific social, environmental, and governance impacts and risks in your industry. - Goal setting and performance indicators
Establish clear goals (e.g., reduce emissions by X% by 2030) and measurable ESG KPIs - Leadership engagement
Ensure top management is committed to and aligned with ESG values, including governance models. - Sustainability and compliance reporting
Implement disclosure practices aligned with global standards (GRI, ISSB, SASB, etc.). - Training and organizational culture
Promote training, internal communication, and a culture of ethics, responsibility, and sustainable innovation.
Conclusion: ESG as a strategic advantage
Implementing ESG practices means embedding sustainability, ethics, and social responsibility into the very core of your business model. More than simply meeting legal compliance requirements, it’s a smart strategy for companies seeking to innovate, grow, and remain relevant in a rapidly changing world.
Businesses that lead in this movement are more likely to attract investment, win conscious customers, engage employees, and create a positive impact on society and the environment.
