ESG May Overshadow Broad Sustainability Agenda, Says Researcher

The success of ESG (environmental, social and governance principles) in the corporate world may be hindering the creation of a broader sustainable development agenda.

This is the conclusion of an article written by the consultant and researcher at FGV (Fundação Getúlio Vargas) Aron Belinky and made available by the Bori Agency. According to him, the business commitment should not end with what the acronym advocates — and following the current wave may even be a risk for society and for business.

“People are treating ESG as synonymous with sustainability, but that’s not it. ESG is a business perspective on these issues. [desse olhar] and that needs attention all the same,” he says.

In the study, the researcher recalls that the ESG wave appears as an expression of the so-called “business case” of sustainability. This model preaches that incorporating good social and environmental practices also brings financial benefits to the company. Hence the motto: good for business, good for the planet and good for individuals.

The problem, he says, is that the sustainable development agenda cannot be fully contemplated by this vision, as important issues can be disadvantageous for companies in competitive terms.

Belinky cites attention to elderly people in poverty and the defense of endangered animals as examples. In his view, these causes will hardly be included as relevant for a company, unless accompanied by some kind of reputational return.

“The main risk is to use ESG as an answer to all the challenges of sustainable development and, as a result, people, companies and governments fail to pay attention to what is not covered by the agenda”, he says.

Despite the criticisms, Belinky believes that the dissemination of the acronym is something positive, as it brings the private sector into important discussions.

On the other hand, in the researcher’s view, the “ESG tsunami” is already overshadowing sustainable development.

In the article, Belinky compares the private sector’s interest in ESG with the UN’s 2030 Agenda, which brings together the 17 SDGs (Sustainable Development Goals) and is considered the main reference for sustainability at the macro level.

A survey carried out by the researcher shows that, in the context of business and finance, the popularity of the acronym on Google has significantly jumped from 2020 until now, far surpassing interest in the term ODS.

In his view, the 2030 Agenda is broader and should guide the management, practices and results of companies

The article compares the two approaches. While the ESG starts from the sustainability tripod (people, planet and financial results), the SDGs are based on the five letters P: people, planet, prosperity, peace and partnerships.

In addition, the environmental, social and governance perspective maintains the focus on competitiveness and on the ability of companies to generate value for shareholders and investors. It’s the idea of ​​”getting along doing good”.

While the UN Agenda 2030 aims to create a prosperous and sustainable society for all, “without leaving anyone behind”.

“The ESG perspective has in fact great affinity with the ambition of sustainability now embraced by most of the world society. However, if guided only by the sustainability business case, ESG management has a limited reach”, says Belinky.