ONGs and ESG strategies

The term ESG has stood out in recent years and represents environmental, social and corporate governance (Environmental, Social and Governance) sustainability in organizations. This concept has been used to refer to business and investment practices that comply with sustainability criteria.

ESG indicators are a set of conduct criteria that help companies implement good practices in their businesses. This is an excellent way to show investors that they are a viable option to invest.

Now, how can the Third Sector benefit from this new corporate trend? The Third Sector is composed of organizations of a “private” nature (non-profit) dedicated to achieving social or public goals, although they are not part of the government. Therefore, some ESG practices can be used by NGOs, such as governance and impact measurement.

Corporate social responsibility

Corporate Social Responsibility represents the company’s permanent commitment to ethical behavior and economic development.

Given this, the ESG strategy brings together a set of environmental, social and governance criteria of a company, however, sometimes companies need experts in areas that are not the main focus of the business. 

When the topic is social and environmental, the Third Sector can be considered the greatest agent of transformation in Brazil. According recent study, adopting an ESG agenda brings several benefits to a company or organization.

Some examples are:

•  Competitive advantages – that positions a company ahead of competitors in the market;
•   Greater profitability – the higher the price given, the greater the profit;
•  Improve your reputation – main prerequisite for a company to be successful in the long term;
• Increase in your valuation over the years. 

How do NGOs fit into ESG strategies?

According to the founder of the Non-Governmental Organization Ajudôu, Júlio Jaques, given that the company assumes this commitment and has the financial resources, the NGOs have the expertise in the implementation and management of social sports projects, environmental conservation, free school tutoring and many others.

“We are at the cutting edge of what ESG proposes. As we are talking about the return that companies need to give to society, NGOs are the perfect partners to help with this strategy. After all, third sector institutions exist to solve social and public problems that the state is not providing. Best of all, we do it in a more dynamic, agile way and with a proven impact”, says Júlio.

Finally, several social organizations have already realized the importance of adopting these measures. The Institutional Investors Sustainable Investing Survey spoke to 105 organizations in the United States to try to understand the position of CSOs in relation to ESG indicators. Although half responded that they still do not invest in these practices, 12% planned to start implementing as early as 2022.