ESG

A key driver for

sustainable business

ESG
stands for
“Environmental, Social
and Governance.”
These three pillars are comprised of practices related to
environmental, social and corporate governance issues and
are used to measure the sustainability and ethical impact of
an investment, covering a broad spectrum beyond
traditional financial analysis.
These practices are becoming more vital in
investor decision-making. Information on
how a company minimizes its impacts on
the environment, builds a fairer and more
responsible world for the people around it,
and maintains the best management
processes are realities in capital market
discussions.
Public pressure, the financial market, and
national and international regulators are
increasingly holding companies accountable
not only for their own actions, but also for
impacts caused by the entire chain in which
they are involved. Comprehensive
coordination of these dozens of pieces of
data requires robust, transparent and
continuous management.
 Socially responsible and sustainable investing is neither a fad nor a new trend. It first started with early
movements decades ago and has grown rapidly over the past 10 years.

Leon Sullivan, a Reverend and The US Congress passes the

American civil rights leader, Comprehensive Anti-Apartheid Act,

developed a code of conduct prohibiting new investments in South
for business, dubbed the Africa mainly in state-owned

Sullivan Principles. These companies, but also covering much of

principles aim to promote its private sector. This was in response
corporate social responsibility. to South Africa's apartheid policy.

1977 1986

1971 1984 1989

In order to avoid investing church dollars in The Sustainable In the face of the Exxon Valdez oil spill in
companies that contributed to the Vietnam Investments Forum is Alaska, activist efforts lead to the creation of
War, Methodist church Reverends Luther founded in the USA. the “Coalition of Environmentally Responsible
Tyson and Jack Corbett created the Pax Economies,” a non-profit organization joining
World Fund investment fund. They wanted to investors, business leaders and public
align their investments with their values ​and interest groups to accelerate the adoption of
challenge companies to adhere to a standard sustainable business practices and the
of social and environmental responsibility. transition to a low-carbon economy.
 Socially responsible and sustainable investing is neither a fad nor a new trend. It first started with early
movements decades ago and has grown rapidly over the past 10 years.

The UN launches the Global The Paris Agreement is drafted and

Compact Initiative, based on the formed during the United Nations
Sullivan Principles, to foster Framework Convention on Climate
integration by capital markets of Change, where world leaders reach a
environmental, social and consensus on combating climate
corporate governance practices. change and adapting to its impacts.

2000 2015

1992 2005 2016

The United Nations organizes the The Global Compact produces the The 17 UN Sustainable Development
Conference on Environment and “Who Cares Wins” benchmark Goals (SDGs) take effect and serve
Development, also known as Rio-92, report, providing recommendations as a guide for countries to commit to
Eco-92 or the Earth Summit, as a on how to incorporate ESG issues global development by 2030. They
global summit to discuss the link into analytics, asset management cover different aspects of social
between economic development and and securities brokerage. The development, environmental
environmental protection. initiative coined the term ESG protection and economic growth.
Investment for the first time.
 E SG

More than
US$347 700
billion new funds
Governments,

was placed into

businesses and other
groups raised
were launched 90%
globally to capture of S&P 500 companies
investment funds
focused on ESG. $490 capital flows in the - the 500 most traded
ESG segment. companies on US
billion exchanges - published
by selling green, sustainability reports in
social and 2019.
sustainability bonds.

2019/2020 data
Source: https://www.bloomberg.com/news/articles/2021-02-10/the-490-billion-boom-in-esg-shows-no-signs-of-slowing-green-insight?srnd=premium&sref=Tzrj3rtf; https://www.strategy-business.com/

Environmental
In practice, the environmental pillar of ESG
can be observed and managed in different
ways depending on the company's field of
activity. Some of the main environmental
factors regard the company’s conduct in
matters such as: the use of renewable
energy sources, waste and water resources
management programs, controlling
E SG
‘
greenhouse gas emissions, deforestation,
and actions related to climate change.
Actions related to the environment need to
be contextualized beyond the companies
themselves, involving the entire supply chain
where they are inserted.

Social
The social pillar includes social metrics,
with themes that have been increasingly
gaining ground at companies, such as
inclusion, human rights and diversity.
Social practices are related to the
company's treatment of people, workers
and local communities, including health
and safety issues, as well as privacy and
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data protection.
This means that implementation of social
actions must involve not only employees,
but also third-party workers, suppliers and
everyone who is in some way a part of the
ecosystem in which the company is
involved.

Governance
The corporate governance pillar plays a
fundamental role in aspects related to
reducing the risk of fraud, money laundering
and corruption. Good governance practices
are directly linked to decision-making, from
policy-making to the distribution of rights
and responsibilities among the different
participants in companies, including the
Board of Directors, managers, shareholders
and stakeholders.
E SG
‘
Management of topics such as the
independence and diversity of board
members, the compensation policy for
senior management, and the structure of
fiscal audit committees must be done in a
very serious, ethical and transparent manner
in order to establish the highest levels of
good corporate governance at the company.

ESG Frameworks
ESG Reporting, also known as sustainability reporting,
has become indispensable for publicly-traded companies
that want to be recognized as ESG investments. However,
measurement and reporting methodologies are still far
from being standardized. That is why organizational
reporting has seen an increasing diversity of official
structures, or frameworks, to meet investor needs,
making it easier to compare how the options available in
the investment market perform.
A variety of efforts are currently being made in order to
E SG
achieve a unified global standard for reporting. That is
why a list of the leading frameworks most used by
companies and investors today has been adopted.
According to the KPMG 2020 Sustainability Reporting
Survey, the GRI standards are used by about three-
quarters (73%) of the G250 - the world's top 250
companies - and by two-thirds (67%) of the N100 - the top
100 companies in 52 different countries, totaling 5200
organizations. This means that today GRI is currently the
world’s most popular ESG framework.

ESG Frameworks
GRI (Global Reporting Initiative)
The first framework created and
currently the most widely used
worldwide. It was initially aimed at
providing companies with indicators
for responsible environmental
practices. These metrics were later
expanded to include human rights,
governance and social welfare.
SASB (Sustainability Accounting
Standards Board)
This framework was individually
designed for 77 different sectors of
activity, which is a big difference in
relation to the rest. It uses its own
sustainable industry classification
system to group similar companies
and industries based on their
sustainability-related risks and
opportunities.
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IIRC (International Integrated
Reporting Council)
This council is responsible for
disseminating the International
Framework (IR), which takes a
principles-based approach to
providing guidance that
companies should follow when
preparing reports for end-users,
covering ESG content for tangible
and intangible assets.

Frameworks ESG
CDP (Carbon Disclosure Project)
Gathers information about each
organization through a detailed
questionnaire and then produces a
score using its own criteria. The CDP
focuses on topics related to the
environment and does not directly
cover social and governance
aspects.
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TCFD (Task Force on
Climate-Related Financial Disclosures)
In 2020, TCFD-based reporting became
mandatory for all asset owners and
managers adhering to the United Nations
Principles for Responsible Investment (PRI).
The PRI is the world's largest investor
network for sustainable investments.

Benefits and Challenges
Today, regardless of a
company’s segment, it is
essential to look at external
factors from a sustainable and
conscientious standpoint, with
the goal of achieving
transformative results. Some
people mistakenly believe that
ESG practices are directly
linked to only a few sectors.
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ESG is not a passing trend. It involves the future of the planet and society as a whole.
This means that companies that choose to put these missions into practice will not
only fulfill a humanitarian role, but will also be fully equipped to take advantage of
competitive edges in their relationship with investors, financial institutions and
consumers, increasing both profitability and market value.
Nevertheless, most companies still face challenges in planning and implementing
these sustainable practices in their routines and in engaging employees, suppliers,
customers and the entire chain involved. In an attempt to establish impactful ESG
programs and demonstrate progress, leaders face a steep uphill battle, as processes
continue to rely heavily on manual performance and data is spread across different
systems, with a lack of clarity on where to begin and a sustainability reporting context
that is still extremely fragmented.
The importance of ESG software on
this journey
One way to safely accelerate the implementation of these
practices is to rely on software aimed at strategic
sustainability management. By involving Environmental,
Social and Governance factors, a platform will help transform
ESG risks into values and opportunities while also automating
the end-to-end process.
Software helps to stratify information and turn it into
fundamental data for operational diagnostics, in addition to
enabling assertive decision-making at different levels of an
organization. A tool can support goal-setting, risk control and
reporting, and monitoring of ESG performance over time.

Now that you know the
importance of efficient ESG
management for
companies, discover the
SoftExpert ESG, a complete
corporate solution for the
integrated management of
environmental, social and
corporate governance .
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SoftExpert ESG
Environmental, social and corporate
governance management
The platform has interconnected applications that promote collaborative work and
replace several stand-alone management systems that only address specific areas
of the business. The solution helps in the collection, management, dissemination and
analysis of ESG data, making it possible to use popular frameworks such as GRI,
ODS, SASB and MSCI, or even create indicator models and customized reports
according to the needs of each company.
With a complete ESG solution, the SoftExpert ESG improves data transparency and
accountability, saving time and resources and facilitating internal and external
communication and involvement.
Monitoring of ESG targets
Risk and control assessment
Initiative management
Supplier qualification process
Document repositories
View management portal
Company

SoftExpert is the market leader in software and services for enterprise-wide business process
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industry-mandated compliance and corporate governance programs.

Founded in 1995 and currently with more than 2,000 customers and 300,000 users worldwide,
SoftExpert solutions are used by leading corporations in all kinds of industries, including
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SoftExpert offers an integrated suite of

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incorporate new functions.

Whatever the strategy chosen, only a fully

shared Business Excellence environment
allows its applications fit together like puzzle
pieces and work seamlessly.
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