The rise of ESG criteria stimulates the creation of green jobs, new executive roles and remuneration criteria linked to the achievement of sustainable goals
Not long ago, sustainability didn't put anyone in the CEO's chair, but it had the power to remove them, especially in a context of crisis or scandal. With the rise of ESG criteria in decision-making, however, this scenario is changing: investors and consumers have started to pressure companies to pay closer attention to the social, environmental and governance aspects of companies. Executives and leaders who are committed to sustainability, bonuses linked to the achievement of ESG goals and Boards of Directors with greater diversity in terms of gender, ethnicity, origin and sexual orientation are indications that the corporate world is, in fact, experiencing a transition.
One example comes from Boeing. In September 2020, the American aerospace giant created the role of CSO, or chief sustainability officer. Vice President Chris Raymond, who took over the role, set ambitious goals for the company, including a commitment to producing aircraft that can fly on 1,00% of sustainable aviation fuels, which include biofuels from plants or produced from waste, by 2030. Worldwide, 3% of total greenhouse gas emissions come from the aviation sector.
When analyzing the criteria for executive compensation, the trend of rewarding the achievement of ESG goals has been captured by several studies. A survey by the consultancy Willis Towers Watson conducted with 168 American companies in December 2020 showed that 65% planned to link ESG agenda priorities to the compensation of their leaders in 2021. In Brazil, large companies from different sectors have adopted this precedent, with goals related especially to climate change and increasing diversity in companies.
As the world moves towards a transition to a low-carbon economy, the potential for generating so-called green jobs is becoming increasingly clear. A study conducted in 47 countries by the consulting firm EY-Parthenon, commissioned by the European Climate Foundation*, shows that, in the energy sector alone, 13,000 renewable energy projects ready to be launched have the potential to generate 10 million direct jobs or jobs in the supply chain. Of these, 600,000 could be generated in Brazil, a country that already has a natural vocation for renewable sources. According to the study, these projects could stimulate economic recovery after the pandemic, injecting around US$1.4 trillion into investment opportunities worldwide.
With abundant natural resources, the greatest biodiversity on the planet, and equally diverse human capital, Brazil has all the tools to be a leader in this new economy based on ESG standards. At CEBDS, we have reinforced the potential of nature-based solutions, which could deliver 37% of the emissions reductions needed by 2°C by 2030 – the most recent report by the Intergovernmental Panel on Climate Change (IPCC), released in early August, showed that efforts will have to be accelerated and concentrated in the coming years, or the world will risk not meeting the goals established in the Paris Agreement. We need to transform our comparative advantages into competitive advantages, which includes guiding and training our workforce for this new reality, generating quality jobs, social inclusion, and a more resilient economy.
By Marina Grossi
President of CEBDS
