In the post-pandemic world, where there is a severe economic crisis and war continues to increase uncertainty, sustainability is more important than ever.
And although there has been greater awareness on the part of companies regarding their role with the environment, implementing ESG (Environment, Social and Governance) criteria, many have misunderstood the concept of sustainability, even making a profit from it, rather than understanding that their future will depend on how they approach it.
This is because investors are not focused on corporate actions as concrete facts, but as a long-term view, where the business strategy is aligned to the purposes and values, and for that, Governance becomes valuable.
Therefore, to discuss the importance of Governance in companies, BH Compliance held on October 27, the webinar “The G of ESG, the first letter for change”, which featured an interesting panel that addressed the main elements that companies must adopt to be truly sustainable, always based on their “G”.
The panel included Kathleen Barclay, Director of Companies; Axel Christensen, Director of Investment Strategy for Latin America at BlackRock; Francisco Prada, Corporate Governance Officer Latin America and the Caribbean (IFC) World BankGroup, and Susana Sierra, CEO of BH Compliance.
In this context, G-Metrix was launched, a new index to measure Corporate Governance under the guidelines of the World Economic Forum, which is positioned as a tool dedicated one hundred percent to measuring this aspect of ESG criteria, and does not seek to compete with global indicators, which focus on the three letters.
“When asked about sustainability, the “green” comes first, actions focused on giving visibility to what is related to the environment, but many times this is not supported in the company’s strategy, and ends up in practices such as greenwashing, which weakens trust, and therefore opens flanks instead of closing them,” said Susana Sierra.
The guidelines on which G-Metrix focuses are business ethics, transparency, anti-corruption and integrity, tax strategy, supply chain management, competitive practices, board composition, risk and crisis management, stakeholder engagement, corporate leadership, resource allocation, incentive structure, and political accountability.With G-Metrix, companies will be able to demonstrate that their strategies are aligned with their values and purpose, which will allow them to save resources and capabilities, responding to the needs of the future.
Conversation
During the webinar, Kathy Barclay highlighted the importance of Governance in the context of post-pandemic and current geopolitical conflicts, where companies more than ever must ask themselves “who am I, why do I exist and what are my values”, highlighting the importance of values in every company.
For his part, Axel Christensen referred to the work that BlackRock has been doing for quite some time in ESG matters, where its CEO Larry Fink has been writing letters for years to the general managers of the companies that entrust their investment funds to BlackRock, to convey to them the values that drive it and the importance of aligning the purpose with ethical principles. And in this sense, he highlighted the Governance for creating company value.
Francisco Prada emphasized the challenges in Latin America about ESG since the boards of directors are constituted under a very closed structure, are not aligned with the various areas of the company, and do not have a long-term strategic vision, calling for the need to professionalize the supervisory boards, because it is necessary to know if those who make decisions understand sustainability.
In his closing remarks, Barclay highlighted the role of companies in the success of society, and that “to be a contribution they must be sustainable, and that comes from their board of directors”. Christensen emphasized that “what is not measured does not exist, which is why G-Metrix is important, to see how the company evolves”. He also said that what is not communicated does not exist, and that transparency is fundamental. Finally, Prada quoted Socrates with the phrase “know thyself”, to point out that boards of directors need more evaluation to generate improvement plans.
