Introduction
The evolution of governance over the past two decades since the inception of ASG (Environmental, Social, and Governance) criteria has been substantial. However, significant challenges remain that transcend corporate advancements and collaboration, extending into cultural, social, and political realms.
Origins and Evolution of ASG Criteria
The ASG criteria, originating in 2006, have significantly transformed how businesses approach sustainability and corporate responsibility. Initially focusing on environmental, social, and governance aspects that companies should consider in their strategies—such as reducing greenhouse gas emissions and ensuring transparency in corporate management—the concept has now shifted from short-term profit maximization to integrating sustainability, social responsibility, ethical practices, and governance structures promoting equity and inclusion.
Effective Risk Management
Thanks to the implementation of ASG criteria, businesses have learned to manage risks more effectively. This includes identifying environmental and social risks and promoting norms to enhance organizational resilience.
Investment Reference
ASG practices have also become a benchmark in investment, as individuals willing to provide capital seek not only profitable companies but those with positive environmental and societal impacts. This has led to an increase in their adoption.
Success Stories and Ongoing Challenges
The personal care and home care sector exemplifies success, with more companies being recognized for their water management practices, waste reduction, recycling initiatives, circular economy processes, and regulations promoting corporate gender equality, eliminating stereotypes. However, challenges persist in accurately collecting data and integrating it into existing processes.
Geopolitical Context
In a changing and uncertain geopolitical context, recent initiatives in some regions represent a step backward. For instance, the arrival of President Donald Trump led to the dismantling of climate change and renewable energy policies, aiming to accelerate fossil fuel development. This decision has global implications alongside its climate effects, given the United States’ powerful economic status.
China, another major global economy and heavily industrialized nation, emits 27% of the world’s carbon dioxide and a third of global greenhouse gases. Despite having 54 million “green jobs,” with over 4 in renewable energy, China’s efforts need further reinforcement through public regulations encouraging better corporate behavior.
The Urgency of ASG Actions
It’s never too late to undertake ASG actions that benefit everyone. The World Bank anticipates that inaction on climate change will result in an uncertain and costly future, with estimated losses between 0.5% and 2.3% by 2030.
Ultimately, if we fail to protect our planet, no one will recognize the significant changes humanity has made in governance, inclusion, and equity.
Miguel Ángel Marín de la Parra is the President of CANIPEC.
Key Questions and Answers
- What are the ASG criteria? The ASG criteria, or Environmental, Social, and Governance, are a set of standards that guide companies to consider environmental impacts, social responsibility, and ethical governance in their strategies.
- How have ASG criteria evolved? Initially focusing on environmental, social, and governance aspects, the criteria have shifted to integrate sustainability, social responsibility, ethical practices, and governance structures promoting equity and inclusion.
- What are the benefits of adopting ASG practices? Adopting ASG practices can enhance risk management, serve as a benchmark for investors seeking positive societal and environmental impacts, and contribute to a more sustainable future.
- What challenges remain in implementing ASG criteria? Challenges include accurately collecting data and integrating it into existing processes, as well as geopolitical shifts that may hinder progress in certain regions.
- Why is it crucial to protect the planet? Protecting our planet ensures that future generations can recognize significant changes in governance, inclusion, and equity.
