ESG in the investment world


As Elon Musk himself brought up the issue of Bitcoin not being good for the environment, I will elaborate further on this issue and why it is very important for now and in the future.

You can check his thread.

Among the relatively recent and growing themes in the corporate environment and in investments, we have the ESG (Enviromental, Social and Governance) criteria, which involve environmental, social and corporate governance issues. In the last few years, however, this theme has been gaining a lot of strength, mainly after several corruption scandals in large corporations, in the face of the problems of breaking dams in mining companies, in addition to the growing concern with the social environment of companies.

The ESG involves three predominant points, with sustainability as the main focus, whether it is linked to the environment or to social issues. This movement seeks to assess how the actions of companies impact on society, in addition to the consequences for future generations.

The environmental issue is important in the corporate world and in the analysis of investors, as it takes into account topics such as climate change and new sources of use of clean and renewable energy.

In addition, there is a growing concern with the amount of natural resources used in the entire production process of companies, such as the amount of pollutants and waste produced. This concern is important, since these aspects are directly linked to the operating costs of organizations.

The social factor is related to the quality of the work environment for employees, how this environment motivates them to produce, in addition to the attention that the company gives to the way it relates to consumers and suppliers, increasing or decreasing the degree of loyalty of each.

The market has also analyzed the charitable activities that companies carry out in the communities where they operate, as well as their involvement in social projects.

Another ESG criterion is corporate governance, which has also attracted the attention of investors. This is because corporate governance is linked to the company's treatment of its minority shareholders. The way in which the company relates to its minority shareholders may involve, for example, the number of rights they have in relation to the controlling shareholders.

In addition, this criterion also covers issues such as the remuneration of the executive board and the board of directors, the level of transparency of the published information and many other factors. Thus, we understand that ESG issues are part of corporate sustainability and, therefore, should be understood as a business agenda, not just representing costs borne by the company in favor of investors and the market.

Banks, for example, charge higher fees to companies that have a history of corporate governance problems and environmental problems. Currently, several sectors need to complete questionnaires that address the socio-environmental theme for the validation of credit receipt by the bank, directly impacting the company's rating level.

Thus, we observe that, by ignoring socio-environmental issues, companies will also be ignoring a significant number of consumers and employees. For this reason, the ESG criteria represent, above all, a generational theme, which will continue to be increasingly commented on by various sectors of society.

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