Sustainability is a compelling subject! A few years ago, this issue was merely a challenge; today, it is a priority for international organizations, governments, and businesses.
This article does not attempt to justify or vindicate any global strategies and definitions that focus on SDG objectives (United Nations, 2015) or periodic reviews conducted in Forums such as COPs and others; it instead seeks to explain how they are applied within organizations that quickly adapt to the growing need to contribute to a more sustainable world in increasingly global markets demanding products and services with their unique “sustainability” branding.
The structuring and financing of projects is a part of corporate finance, and in doing so, we are passionate about sharing our clients’ challenges to make their businesses and projects more robust and efficient. In recent years, after applying the traditional concepts and methodologies of Value Management Office (VMO), we have come to understand it is also essential to incorporate ESG (Environmental, Social, and Governance) criteria in the pursuit of excellence, sense of urgency, and transcendence of value for our clients.
This approach represents a pragmatically advanced and creative strategy for managing Stakeholder assets, first internally, in the structuring stage of the projects, then externally, in the search for financing to execute the tasks. In our current professional practice, to access external funding, specifically from Stock Markets, the structuring of the projects must follow the models of “business sustainability” with already incorporated ESG criteria into the strategy, observing “Guidelines for the issuance of green bonds, social and sustainable” indications that many local Stock Exchanges have published complying with international financial or sustainability organizations guidelines.
The parallel and obligatory application of the mentioned elements leads us to think that corporate finance will soon be known as “Sustainable Finance.” From this point forward, the search for financing previously available for standard projects will be restricted to those with the new sustainability outlook.
What should be done? We hypothesize that a new “business strategy” must integrate ESG criteria into its primary components: Corporate Strategy, Business Model, Strategic Plan (Transformation/Transition), System of Indicators and Reporting, and Verification and Validation of Requirements. This new approach calls for the participation of Senior Management and Experts who, utilizing concepts and methodologies such as Transformational Consulting (TRS: Transformation & Restructuring Services), will reenergize the business cycles of companies, ultimately initiating the transition towards Sustainable Finance.
The time has come for global networks supporting enterprises to promote multidisciplinary workspaces, known as Interest Groups or Think Tanks, to develop guidelines with elements that foster reviews and audits. International and local regulations already stipulate incorporating and including policies in Financial Reports.
Autor: Rodrigo Quezada Ochoa, Advisory Director – LinkedIn Profile