Environment, Social Responsibility and Corporate Governance (ESG): Fashion or Survival?

Caring for the environment and reducing social inequality are certainly nice causes that are widely defended globally, and have therefore gained great media coverage over the years. It is a fact, however, that these issues have always been treated as the responsibility of the State, NGOs and philanthropists of all shades, almost totally dissociated, if not enemy, from capital and profit.

Things are changing, though. Protection of the environment and reduction of social inequalities also became of interest to the financial world and today they constitute the pillars of the emerging world economy based on ESG (Environmental, Social and Governance) criteria. An economy that values investment funds and companies according to their greater or lesser degree of adherence to socially responsible practices. In other words, funds and companies that invest consistently and demonstrably in the production of goods and services that value the environment, avoiding, minimizing or seeking alternative solutions to the negative impacts of production and that strive to develop, promote and maintain peaceful, fair and inclusive relationships with their employees, suppliers, customers and the communities in which they operate, are best evaluated (and priced) in the ESG financial market. All this under good corporate governance.

For a good ESG rating, funds and companies should raise environmental and social responsibility issues as part of their business objectives.

To this end, companies need to develop internal policies that encourage behaviors positively valued by the ESG standards, as well as incorporate in their by-laws rules and practical procedures for acting, monitoring and controlling these behaviors: corporate purpose compatible with ESG values; transparency in the form of approval of acts (escalation, double or triple degree of deliberation); internal inspection bodies with effective powers to restrain and punish conduct contrary to ESG standards; periodic taking and rendering of accounts; specific (non-financial) mechanisms for assessing the social and environmental impacts of their activities; balance sheet that is an authentic and faithful picture of corporate business.

Funds and companies should, in particular, elect to the position of administrator persons of good standing, with a personal and professional life history consistent with standards of probity and capable of remaining faithful to the ESG values advocated in its policies and bylaws.

In a world where capital and profit have so far gained much more value, space and relevance than human beings, the systematization and adoption of ESG criteria by the financial market comes as a breath of hope for the future of humanity. It comes as part of the joint effort, public and private, to put in charge of states, economies and companies, people capable of making ethical and moral choices for the benefit of other human beings and not things, money and algorithms.

The task of adjusting business to ESG criteria is arduous, but essential for the survival of both human beings and companies.

Beatriz R. Yamashita is a lawyer specialized in Tax Law, with a degree in Corporate Law from the University of London (King's College), in the following specialties: European Community; International Commercial Transactions; Double Taxation Treaties; Intellectual Property; and Human Rights; and Schiller International University (London Campus), with specialties in Macroeconomics, Financial Administration, Accounting, Marketing and Statistics. Beatriz is also specialized in mediation and arbitration by the Psychological Mediation and Mediation Advocacy Course (International Bar Association Mediation Committee) - Regent's University - London/UK. In Brazil, she has based her knowledge in the Institute of Transformative Mediation - a training course for mediators using the 'Reflective Transformative Approach' method. Recognized by the National Council of Justice (CNJ). She has extensive experience in national and international companies and since 2006 she is a founding partner of Miguel Silva & Yamashita Advogados, acting in the following areas: Corporate, Contracts, Mergers & Acquisitions, Foreign Investment, Corporate Mediation, Real Estate, Tax (Indirect Tax) - Opinions, Business Strategy, Preventive Consulting and Selective Litigation.

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Beatriz R. Yamashita Lawyer, specialized in Tax Law, with a degree in Corporate Law from the University of London (King's College), in the following specialties: European Community; International Commercial Transactions; Double Taxation Treaties; Intellectual Property; and Human Rights; and Schiller International University (London Campus), with specialties in Macroeconomics, Financial Administration, Accounting, Marketing and Statistics. Beatriz is also specialized in mediation and arbitration by the Psychological Mediation and Mediation Advocacy Course (International Bar Association Mediation Committee) - Regent's University - London/UK.
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