Discussions on ESG with Insper Professor Carolina da Costa

July 2023

We held another edition of G5 Talks and, this time, our guest was Carolina Costa, a Partner at Mauá Capital and Professor at Insper. In the virtual chat, held in September, Carolina spoke with Corrado Varoli, the CEO of G5 Partners, Levindo Santos, Senior Partner, and Liran Gostein, Analyst about ESG (environmental, social and corporate governance) and how it impacts companies, investors and society in general. G5 Talks is a project through which business leaders exchange experiences and learnings with the team at G5 Partners. The participants debated the current ESG scenario in Brazil, including the challenge of incorporating ESG principles and best practices by companies in the financial market and the role investors play as catalysts for this transformation. Carolina explained that ESG is a way of doing things, how a company operates its business. In other words, it is a model encompassed by principles that imply a more robust and challenging agenda. “Social principles are linked to mitigating negative impacts and generating social value. In terms of the environment, we need to observe the inherent risks of business actions regarding the negative impact they can bring to the environment. Governance is more than compliance, it involves dividing authority, transparency of information, equity and diversity”. 

The appropriation of ESG practices and values by resource managers is somewhat recent and companies interested in joining this initiative has grown in Brazil. According to Carolina, the Covid-19 crisis accelerated this process, as society became more alert to the real value of this agenda. “Society is more sensitive to certain agendas that directly impact future generations. Today, we have second and third generations of families questioning investors and wanting to know what they are investing in. ESG investing will be the nutritional table for investors in 10 years”.  This dynamic has a consequence, which “brings a special moment to the financial market”, as the market has become an activist, a driver of corporate actions and investments in this agenda. “There are two strong driving forces that transform society: consumers and investors. The financial market has the opportunity to create a more protagonist agenda”. Carolina also added that, as soon as engagement occurs, there is no room for inconsistencies in the agenda. That is, businesses are required to maintain the same level of excellence in their activities as they will demand from their investments. 

How to advance the ESG agenda in the financial market? 

Carolina states that, for the agenda to increasingly advance in the financial market, companies need to foster a collaborative environment among themselves. “We need to combine competition with collaboration and find ways to work in partnership. We have to understand there is an opportunity for innovation. To take a leap in innovation, we need to invest. Individual gains will be sacrificed in favor of an agenda that will be leveraged in the future”. 

Read more: ‘Does the ESG appeal only attract the naive?’ Correct principles, dubious conclusions. (In Portuguese only) 

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