ESG for Executives: Challenges and Opportunities in the Sustainable Transition

About three years ago I met with Danish Cleantech Hub - a platform resulting from a public-private partnership led by the Confederation of Danish Industry that gives visibility to and promotes the commercialization of Clean Tech solutions in the USA. Based in New York, the headquarters of the United Nations, I asked how aware American companies were of the SDGs (Sustainable Development Goals) and the answer was: very little. I then asked if the level of awareness was the same for ESG criteria, and the answer was the opposite. Considering the impact it has on companies' finances, the level of awareness is very high.

According to a study carried out in 2022 by the Edelman Trust Barometer, 88% of institutional investors put ESG issues alongside operational and financial considerations when making investment decisions; 60% of workers choose a workplace based on their beliefs and values, while 58% of consumers buy or defend brands that match their beliefs. It is therefore natural that a growing number of managers are increasingly seeking to understand how their activity should have other criteria for analyzing a company's risk than those used by the capital markets.

This acronym, ESG, has become part of the lexicon of organizations, although it is often misused as an enabler of greenwashing. To minimize the likelihood of this happening, the European Commission has published a set of directives promoting transparency, which are gradually becoming widely known. With this, it aims to increase the transparency and responsibility of companies in relation to their environmental and social impacts, combat greenwashing and enable investors to make more informed investment decisions.

Out of curiosity, I decided to use the AI tool Perplexity and ask: "What are the main European sustainability directives searched for on Google?". Since it wasn't possible to assign an exact number of searches, an approximate hierarchy was inferred based on the frequency and prominence with which these directives are mentioned in the different results: in first place comes the Corporate Sustainability Reporting Directive (CSRD), followed by the Corporate Sustainability Due Diligence Directive (CSDDD), the Ecodesign for Sustainable Products Regulation (ESPR), the Green Claims Directive and, finally, the European Sustainability Reporting Standards (ESRS).

All these directives play a decisive role in terms of ESG criteria, as they oblige large companies not only to report detailed information on sustainability issues, covering the ESG criteria (CSRD) using the European Sustainability Reporting Standards (ESRS) to determine the content of sustainability reports, but also to establish clear measures to protect human rights and the environment throughout their value chain (CSDDD).

It is important for managers to acquire the necessary knowledge so that they can not only adjust their organizations to the necessary transition, but also respond to the requests that, in the case of SMEs, have been coming from their customers.

The "ESG for Executives" program covers all these topics over two days, giving participants the opportunity to have a first contact with this new reality that is here to stay and to assess how they can integrate it into the daily life of their companies.