Business side B in Brazil reconciles profitability to the sustainable agenda

For some time now, the ESG agenda (an acronym for environmental, social and governance principles) has become a fever among the private sector. However, there is a part of the corporate world that proposes to go beyond best practices to actually incorporate the three principles: they are B companies.

These are companies whose business model involves the inclusion of social and environmental returns among the objectives, argues Francine Lemos, executive director of Sistema B, an initiative that certifies these companies.

In Brazil, most of the 213 certified organizations are small and medium, which were born with purpose. But large groups have also managed to incorporate the sustainability agenda. Natura and Danone, recently certified, are among the giants with the B seal.

“Not every company can become company B. The business needs to regenerate, improve people’s lives. It’s not just whether the product is sustainable, but also the way to do it: is the operation generating a positive impact? The company generates more benefits if it exists or ceasing to exist?” asks Francine.

The director recalls an example of the adjustment between financial, social and environmental accounts that took place at Natura, where she worked for 13 years. “In the 2000s, when the company was growing 30% a year, there was a year in which it did not reach the organizational climate goal. Natura did not distribute bonuses that year,” he says.

“It was a clear sign that ‘what we are preaching is serious: we need to balance profit with people’s well-being, or this is not success'”, he says.

Francine also says that the social and environmental goals need to be well combined in the institution’s main governance body, which is the board of directors. In this way, the long-term vision emerges.

The certification process B is long. “We were born with the purpose of generating a positive social and environmental impact, yet we had a lot of work to prove the results”, says Leandro Menezes, one of the administrators of Positiva, a company with the B seal dedicated to the production of sustainable cleaning products.

Coming from the retail sector, the administrator says he was marked by the first decision he had to take ahead of company B. “We bought a more expensive plastic package because it had more value for recycling. It’s the kind of decision that makes this business different .”

The company’s challenge is to reach a competitive price, both because of the lower production volume than the big brands and because of the internalization of social and environmental costs. “We already have a concentrated multipurpose cleaner that is cheaper than conventional ones, but we are still looking for a more affordable price in other products”, says Menezes.

While the B side of the business points to the absorption of socio-environmental costs, some of the executives associate the acronym ESG to combating corruption and conserving the Amazon. The massification of the term led companies to question what would be the novelty of the agenda.

“ESG is nothing more than the capital market’s view of sustainability itself,” says Carlo Pereira, executive director of the UN Global Compact’s Brazil Network, which brings together 1,500 organizations in the country.

Created in 2000, the pact called on companies to assume social and environmental commitments and, in 2004, it did the same with the financial market — for which it created the term ESG.

“The 2020 World Economic Forum presented climate risks as the most relevant for business and, in the same year, a letter from the president of Blackrock, Larry Fink, also warned of climate change, which brought greater focus to the subject. “, explains ASA Investments analyst Natália Belfort, a specialist in ESG.

In a survey published in April, the UN Global Compact’s Brazil Network interviewed 308 executives from management up to the presidency of Brazilian companies about their knowledge of the term ESG.

According to the report, 31% of business initiatives linked to this agenda deal with combating corruption, 29% deal with impacts in the Amazon, 20% create incentives for social inclusion, 11% form committees for organizational integrity, 9% encourage diversity, 6 % deal with climate change and only 5% seek to promote equity.

Agribusiness was the sector most familiar with the acronym ESG: 87% of respondents said they had already heard about the subject in 2020. In the financial sector, 85% knew the term. The food and beverage sector was the most divided: only 54% of executives said they knew the term.

In companies, the most common acronym in the sustainability departments is another: CSR, for Corporate Social Responsibility. Over the past 20 years, the term has served a wide spectrum of business actions, most of them in search of brand and reputation differentials, with advertising and philanthropy actions, through the creation of foundations to allocate their private social investment.

Before, in the 1990s, the socio-environmental agenda in companies sought to comply with standards —from environmental licensing to labor legislation.

Today, practices that go beyond the legal obligation of business and even seem to be pure voluntarism can also involve pragmatic goals, such as saving resources and, in the case of social actions surrounding operations, the so-called ‘social license to operate’, which avoids resistance from the population through creating community benefits.

However, the biggest challenge imposed by the sustainability agenda implies the review of business models, whose conventions always maximize the financial return. It is necessary to change the corporate culture, which can take place in stages.

At Suzano, an export-oriented pulp and paper manufacturer, the sustainability agenda is linked to the mitigation of environmental risks. One of the impacts of planting eucalyptus is the high water demand.

The company mapped sensitive basins and defined changes to reduce the impact in 6% of its area of ​​operation, with changes in the planting cycles, joint use of water and sharing of technology with neighbors.

“The conservation of the surrounding landscape is also key to guaranteeing water availability. Therefore, we launched the goal of connecting half a million hectares of priority areas for preservation in the Cerrado, Atlantic Forest and Amazon biomes by 2030”, says Cristiano Oliveira, Suzano’s sustainability manager.

“We have been in some areas for 40 years, we are interested in the conservation of resources”, says the executive.