About this ATALK
In this ATALK, Aron Belinky talks about the different generations or phases that sustainability has gone through and how this affects companies.
Find out more:
- How a company can know if the guidance it is following is in line with sustainability.
- How SMEs understand ESG and the SDGs.
- What is the correlation between stakeholder pressure and companies’ sustainability actions.
This ATALK will give you a deeper insight into how the SDGs and ESG are affecting companies and how they are expected to do so by 2050.
Transcript
Joana Alves, Co-Founder at APLANET, interviewed Aron Belinky for this ATALK. You can find the full transcript of their conversation below.
| Joana Alves | Welcome to ATALKS where sustainability has a voice. At APLANET, we have created this space so that we can discuss the most important sustainability hot topics and for that we interview relevant sustainability professionals from different sectors and geographies so that they can share their experience with us. Today, we’re delighted to have Aron Belenki with us as a guest from Brazil. And to introduce our guest speaker, Aron is a specialist in sustainability, corporate social responsibility, impact investing and sustainable production and consumption. He’s active in the social environmental field since the 80s and combines experiences from business, NGO and academic backgrounds. He’s currently a researcher, teacher and professional speaker, being the leading partner of ABC Associates, a consultancy company in Brazil. Which is the technical responsible for initiatives such as the IS CB3, the Brazilian Stock Exchange Corporate Sustainability Index, the Fashion Transparency Index, Brazil for NGO Fashion Revolution and research such as the perception of ESG by Brazilian SME’s. Aron, it’s a pleasure to have you here today. |
| Aron Belinky | Nice to be with you, Joana, and it’s really a pleasure to have this opportunity to share experiences and share ideas. It’s great. Thank you very much. Congrats. |
| Joana | Thank you so much. It’s a pleasure to have you here today. I mean, you have an impressive CV, you have a very long career in sustainability and it caught my attention that you started being active in the social environmental field back in the 80s, where sustainability was not such a hot topic. So can you tell us why did you started 40 years ago to dedicate your professional life to sustainability? |
| Aron | OK, well, it’s something that I sometimes tell people that indeed I started even earlier, but not as a profession. So I was already in the 70s involved with this ecological and nature related causes. So that’s something that came very early for me. It’s something that came from family and came from my father and my mother. And being in Brazil, I have the opportunity to visit Iris in the Amazon and in the Cerrado when I was very young, a child. And it created a passion for nature and also for the way well-being of people. So that’s something that came very, very early and actually curiosity, by that time, of course sustainability was not a trend, not even the word was there. So we used to talk about ecologistas, ecologists and three huggers. So this kind of of people, so weird people. And something that’s from this time I have and I think it’s gives a makes a connection when I was nine years old in 1973 so it’s quite a bit of time I wasn’t when I went with my father to the first time in the Amazon and I got a a membership where an organization called the National Wildlife Federation. So it’s an NGO and in this small ID card for members it has a pledge that I think it’s very, very contemporary news I read it’s very short something that says like it is like that, so the National Wildlife creed. So I pledge myself as a responsible human to assume my share of man’s stewardship of our natural resources. I will use my share with gratitude without greed or waste. I will respect the rights of others and abide by the law. I will support the sound management of the resources we use, the restoration of the resources we have despoiled, and the safekeeping of significant resources for posterity. I will never forget that life and beauty, wealth and progress depend on how wisely men uses these gifts. The soil, the water, the air, the minerals, the plant life and the wildlife. This is my pledge. So it’s could be written today. It’s still the same thing and we’re not talking about, I say the economical instruments behind this discrete or this idea, but the ideas are there. So it was something very early for me almost 50 years ago, actually 50 years ago and. When I graduated, when I was in school, we in Brazil were in a very, very, let’s say a hard time because we have the military dictatorship in the country and we have a lot of involvement of people in the redemocratization process. And by that time, a number of people that I was connected to, we started to engage in protecting natural areas. And so when the time I started actually was as an activist, exactly fighting for the preservation, the conservation of wild areas near Sao Paulo, far from Sao Paulo, and against pollution and this and that, and because of the context I was with this merged with the… Let’s say fight for Citizenship, for human rights. Or social equity. So the ESG, the ethics, it was already there and the whole sustainability idea and I could throughout this time be part of the development of this… Let’s say ideals and the way this was working. So I had my plan when I was in university. Was to work in this area. So I was looking for something in the public sphere, in the government and they studied public administration and geography. So I graduated in these things, in these areas. But my family was an industrial family. So my father, my uncle, they have a business, the industry, business and air conditioning. And I was never actually willing to do that. But what happened is that because of family matters, I have to join them, join the company just after I graduated. So from 23 years to 40, I worked in the family companies, in the air conditioning engineering, and also in communications with my wife. And when I turned 40, it was already 19 years ago, I decided to go back to my tracks and start working professionally in sustainability. And so then I started my, let’s say, my current career as a sustainability professional. But throughout this time I have been even when I was in business in a private company. Dealing with that, so for instance in 1986-87 I was very involved in the negotiation of the Montreal Protocol representing the Brazilian air Conditioning association. So by that time we were preparing Brazil, the real 92 conference and there was a lot of movement here. Dealing with pollution and I love knew a lot of people because of the activism. So I somehow merged these things and got involved. And so from that I got involved with Athos Institute that’s for Brazilian Business Association, dedicated to social responsibility. And so it’s something that comes from inside out, from my personal beliefs and values and also from my experience in different fields. So that’s more or less what’s happened. Sorry to be so long. |
| Joana | No, it’s a very, very inspiring story where you can… Basically you found your purpose aligned with your values at such a young age also because of the exposure you have and the connection you have with nature being a Brazilian and having this opportunity to go to Amazon and have being born in this beautiful ecosystem and then also having this experience in companies. So you know what are the challenges of the day-to-day of the economic system and then connect both right align your values and your purpose to your professional. Life that is beautiful and the pledge is beautiful. Thank you so much for sharing that. And you have done a long career in sustainability that combines different experiences because you work for businesses and NGO’s. You also have an academic experience in your opinion because you have this broader perspective: What has changed in the last years regarding sustainability challenges? And what has changed in the awareness of the system regarding these challenges? |
| Aron | Yeah, I think that the main change that happened in this 50 years is that a lot of things that were… Let’s say scientific perspectives or ethical based perspectives, became reality. So I’m talking about, for instance, climate change and global warming. So I remember talking about global warming and reading about global warming and the greenhouse gas effects really in the early 80s. So that was something already there in, not in scientific publication, but also in comics for instance, I remember comic I read in the when I was a child that was talking about greenhouse gas effect so these things were already there. So we’re talking about the ozone hole the about the extinction of species, the super population, waste and this and that. What happened is that in this period of time we all these things became reality and they became tangible. So it’s a very interesting indicator if you think about that. So when I was born in 1963 the population of the world was 3 billion people. Now we have 8 billion. So it’s almost tripled in my lifetime so far. So maybe to be even even farther, again so when I was born the global ecological footprint was 70% of the planet’s capacity, biocapacity in this early the mid 70s it reached the tipping 1 planet capacity and now we are something like 1.5 planets or 1.40 something like that. So all these things that were foreseen situations by scientific or ethical reasons, they became tangible challenges. So I think that’s the first thing that changed very, very clearly. Another thing that changes very clearly is globalization. So we have now a possibility of creating opinion, sharing technologies, creating markets, exchanging goods in a scale and in a speed that was never, never before. So the combination of these things, so a huge population increase, the reaching of the planet boundaries. So we are actually pushing the planet boundaries and going over some of them already. And in the other hand, the fact that people and opinion and communication are globalized, this comes together to make sustainability an actual matter. So something that people are not thinking about or projecting something like that or believing that it is important, but actually having to face the challenge and to feel the pain. So I think that that’s the thing. And as a result of that, markets are becoming more and more aware. So companies that have a more let’s say broad perception, more systemic perception, they some years ago, some 20 or 30 years ago already have perceived that and now other companies are realizing that this is something important. So we can elaborate a bit on that about to say the role of financial capital, the role of long term investors. So there that’s a situation where these aspects became actual risks and challenges that can be somehow perceived and felt by companies and this will create a different ways of working. So I think that’s that’s in general what I think that that changed very, very clearly. OK, there was another thing that which I think it’s interesting to think about based on all of this, something that for me synthesizes the idea is that we are leaving generational transformation in the way humanity lives in the planet. So if you look back in the from let’s say, the consume revolution in the early 20th century with Ford and fail and Taylor. So when we create the mass consumption and the mass production system in the early 20th century. And if you think of what we are envisioning for 2050 or something like that from 20 or 30 years from now, which is a completely different thing in terms of circularity and looking at the planet in the in the closed loop. It was a paradigm shift, a complete shifting in the paradigm where humanity lives. So, and I call this the cowboy astronaut transition. So when I was born, we and the companies we people we companies we work as cowboys. By Cowboys meaning that we have the whole world to spread out, we can explore new frontiers, we don’t have to attach to the place we wear. We can have a very rough relationship with others and with nature. So I have an article about that’s called from Cowboy to astronaut that’s it’s a splits this paradigms in different ways and now during my lifetime, we are now seeing ourselves as astronauts because we can see the limits. We can’t think about going beyond the limits, even if you think about colonizing Mars or whatever. So it’s not something that’s feasible, of course in the short term. And so we are trapped in this one planet we have. And so that now that we are pushing the limits, we have 8 billion people here, we have already go went over the planetary boundaries and the limits. So we are doing things that we have to reorganize ourselves and the economy in a way that will allow us to keep living in the spaceship, spacecraft. And so that change of paradigm, it happened in three generations. Essentially so. And I think that this three generation model and I have an article on the three generations, also it’s a very short article in the GB Executive Magazine. It’s in Portuguese. We should translate it to English sometime, but what happened there is that I see this transition in three generations that can apply to humanity and it can applies to companies and even to people. So the first generation. Is the moment when the idea that there’s something wrong happening, so is the awareness moment. Is when so a bell is ringing that something is wrong, something is happening from a global perspective, this is what happened from 1970 or late 60s to 1990 to the real 90 to the Real 92 Conference, so. It’s the time of this to come conference, the time of Silent Spring. So it’s when humanity and people start to ring the bell that something wrong was happening in the ecosystem. So that’s the 4th generation. So the news are arriving and the role of people engaged in that is to spread the word to say people that something wrong is happening. So we have to be aware. The second generation that from a global perspective for me is from Real 92 to real plus 20. So this 20 years is when we start to build a system to deal with the challenge. So in a company is when it’s not more someone talking about sustainability or ESG, but when we start to build ways to make sense of how to deal with this challenge. And this sense making is something that has to talk with the higher level, the strategic level and also has to make sense for the lower levels in terms of operations. How can I actually make this happen and if you go to the global perspective again from 19, from from 92 to 2012 or 2015 with the SDG’s is when we as a humanity, as a system we negotiated the basis of the standard. So that’s the time when we talked about the GRI, ISO 26,000 when SAS was starting. So the conferences and this culminates in the SDG’s and then in Real plus 20 and gender 2030. So this time from 92 to 2030 is what I call the second generation that sense making era. And from a professional perspective is making sense to the top, to the bottom of the hierarchy of a company. Then comes the third generation, which is the implementation generation that from my perspective comes from 2015, from the SDG’s to 2050, which is the limit that we have very clearly when either as Aachen Steiner says from a you not now UNDP now actually I came. That things will change by design or by disaster. So we are trying to make them change by design because it will be better for us, humanity. So the time for that is 2050, 2030-2050. So Agenda 2030, which is closer but OK, 2050 can be reasonable, but something will change very drastically in the next 20 or 30 years. So this for me is the third generation which is the implementation. So that’s the time we have set the standards. We know exactly what we when they have to do, but now we have to do things. So that’s the doing generation, the action generation. So that’s more or less the way I see the change of things in a very big period of time, but that’s what we are living actually. |
| Joana | Thanks Aron. This was a very enriching lecture on the evolution of sustainability challenges. I love the expression on coming from cowboy to astronaut transition and also the three generations are very very well explained and you mentioned the third generation coming from 2015 where the SDG’s were implemented and actually you hold a PhD degree on the assessment of corporate contributions to the SDG’s, right? Can you explain us a bit? What were your conclusions doing this research? |
| Aron | OK, sure, it will be a pleasure. Actually I have a video with that. It’s important because again but a 20 minute video explaining the thesis. But the broad idea is that what triggered me to research in the PhD is the fact that companies are looking for guidance, companies are looking for things that will help them or our guidance documents, things that will help them to enter the third generation and to be successful in that generation to implement things. And we saw in recent years from 2012 a proliferation of a number of different instruments and the services and proposals of companies and different actors appearing in the ecosystem. So that’s a lot of things happening and that’s a lot of noise. And my concern is how a company can know if the guidance it’s using is actually in line with sustainable development, because the thing is we can talk about SGG matters and make proposals that are dealing with SDG matters without actually being positive in terms of sustainable development and the level of ambition of Agenda 2030. So there’s a number of things, OK, everybody can close the water while brushing the teeth. Everybody can turn off the lights and can reduce waste. OK, that’s fine. It’s important to do that. Companies can do this and that things, reduce packaging and so on, reduce emissions. But is this enough? Is this actually making the company engage in the transformation in the scale and speed we need? It is actually going towards the challenges pointed out by Agenda 2030. So that’s my concern. And So what I developed in my PhD, it was a very practical perspective is a tool that is designed for the assessment of tools. So it’s, it’s a, it’s a methodology and it’s a, it’s a very practical thing in terms of some guiding questions and some criteria that one should assess the guidance that you are you are using either a methodology that’s a computing companies proposing or a standard that you found or a theory, an investment theory behind the investment fund or something that is say behind the. Some some logic of any action, any program and initiative. So you can look at that through these lenses, which is what I developed and realize if this is how far this is aligned with the SDG’s paradigm and thinking SDG’s as the closer we have as an action plan towards sustainability. So that’s more or less what I what I created. So and it’s based in a framework which I called CIDI, it’s a CIDI. So this it’s a census from what I see in the business perspective about Agenda 2030. So it talks about connection, integration, dimension and inclusion. So connection, integration, dimension and inclusion, CIDI. So connection stands for if what you are talking about or what the tool’s talking about is actually connected to the matters, to the issues and to the goals of the SDGs. Integration is if it is actually integrating the what you are doing, what it’s proposed to the company to do in the core business, so it’s integrated to the core business. And also if it is integrated across the different SDG, so because they are integrated. The third thing the per dime is dimension is about time and speed, scale and speed. Because Agenda 2030 is not something to be patient about. It’s something to be impatient. It has a sense of urgency and the same sense of dimension of the change. In order to make it, to make the change, we need the time we have. And finally, inclusion is about this the the motto of original 2030 that’s leave no one behind. So while doing all of this, I am thinking about how this will be inclusive in terms of people. It will just be accessible for people. Will this create new opportunities for people that don’t have livelihoods today. So that’s the, the, the core of my the two I developed. So to make the connection between guidance and standards and Agenda 2030 sustainable development as a whole. |
| Joana | It’s good that you mentioned the different reporting styles because we see that there’s a wide range of reporting styles across the globe and that there is consensual that there is an urgency for the interoperability and harmonization of standards. We know for instance that recently the ISB has announced that they will establish or that they have the will to establish a global baseline but it’s still very difficult and for sure it’s very difficult for investors to interpret all these different reporting styles. So do you foresee that this interoperability of standards for one side and this harmonization of regulation on the other hand is something that will happen soon or we’ll still have this proliferation of information from different sectors and countries? |
| Aron | I think we’d all like to say, yes, that it would happen soon, but I think the honest and seriously, realistically, it. you know, companies are still going to be challenged by having to comply with different types of reporting standards in the short term, it’s probably going to get maybe harder for companies and investors before it starts to get, before it starts to get better. And it’s not just limited to the reporting standards, I think it’s also, you know, investors put a lot of focus also on ESG scores, sustainability scores and sustainability ratings to take views on how well a company is managing their sustainability risks. And there needs to be consistency in that space as well, you know, not just from a reporting perspective, but also the ESG scores and the ESG ratings I was speaking to a bank recently in Spain and in fact it’s not even something that’s unique to that, this particular bank, you know, I’ve heard it from other clients as well that they they participate in 15 different ESG score processes you know with external companies. And in investors trying to look at those different, those 15 different scores, which might be, which might be, which might vary significantly to try and understand and take it a clear view on how the company is managing its sustainability risks. And I’m not sure how feasible that is in the long term from the investors perspective, but also from the company’s perspective. You know the company has to build out a significant team to be able to complete the different questionnaires that they need to be completing and to be managing the relationships with these different ESG score providers. So I think we’ll also see a trend in that space where maybe the 15 different ESG scores that are big, large European bank might have today. Will come down to four or five different scores, or maybe even less which kind of the investment community agree on the right scores and metrics to be able to? To comparably judge across the board how companies are are managing their their sustainability. So, it’s quite varied answer, but I think certainly from what I’ve read with regards to the consolidation of reporting. Yeah, I think there’s the certain areas that they’ve made good progress on. There’s other areas that I understand. There’s still quite a lot of inconsistencies. And I haven’t heard anybody say that those inconsistencies can be easily resolved in the short term. So I think, I think definitely longer term they’ll, they’ll be, we’ll find the right way forward. But in the short term, I think it’s still quite a challenging, challenging space. d other teams coming are going to make Terra dos Soños grow in different way and that’s why I left basically. |
| Joana | Very, very interesting because of course companies, even though they have the will to go towards a sustainable development, they need guidelines, they need methodologies, they need metrics and they need global metrics in order to compare themselves with each other, right? So it’s it’s a very, very interesting study. I hope I can read your PhD work for sure. |
| Aron | You’re a Portuguese speaker, so. |
| Joana | Yes, so, so lucky me. And besides the work and the research that you did regarding SDG’s you you also have amazing milestones in your work regarding standards and the creation of indexes and an example is that you helped building the international social responsibility standards ISO 26,000. So can you tell us a bit more about the experience of creating this index and more or less if how do you think that companies look at this Standard and how do you think that companies are dealing nowadays with this proliferation of standards, because there are so many nowadays? |
| Aron | Exactly. So. ISO 26,000 was a lifetime experience. So it was an amazing thing to do indeed, because it was a global process. That involved working directly in the working group, something like 570 experts from 53 countries. I guess so more than fifty countries and the number of NGOs and global organizations. So it was an experience in terms of collective construction or collective building of such a complex and broad instrument. That’s something remarkable. I think that the making of ISO 26,000 will deserve a book in itself because it was really amazing how this happened and how this was steered and the learning from the group and in the process of creating that was something that was really, really very rich. And because it was, it was a very careful design process. And it involved very careful attention to balance. So we have people from developing and developed countries and in the very big number we have a gender balance who have stakeholder groups balance. So it was a very, very diverse group in all senses and the people in these groups who are actually representatives of other groups and their home countries. So in each country, each of these 50 plus countries we had groups also multi stakeholder and also very diverse discussing the same topics. And so from my estimation the whole thing involves something like 5000 people working directly throughout the world and this was a seven-year process. Or six year plus it was very, very long. So that’s the downside. So to do this with such a complex thing with all this this careful it was very expensive because we had a lot of traveling and meetings and people getting together and it’s a number of people, a lot of there was not one funder of the thing but was a corporation. But in the bottom line it was let’s say. I don’t know how many working hours of how many people to develop this guidance and this is the downside of the thing. So it was very very expensive and time consuming. But what it created is a very very broad a picture of what are the real and the details of this ecosystem that we are now calling ESG or sustainability and by the time we call it social responsibility, but what is inside it and what’s being talked about is the same thing we’re talking today. And I think that’s the challenge of ISO 26,000 was to embrace the complexity of the issue. So the group didn’t concede in terms of not touching the complexity. So things are complex, things are difficult, things are multi, very diverse and to deal with these challenges we require local level and actually business level assessment of the situation of the impacts of the contacts. So it’s not something easy to do, t reorganize the world’s production and consumption system is not an easy thing. This has been done the built throughout the generations and generations and now we have one or two generations to reorganize this thing, because we are reaching the planet’s limits. So it’s an emergency to redo something that is so complex. So it’s not an easy task and that’s not an easy, an easy answer for that. So I think that the beauty of ISO 26,000 and what makes it still very contemporary, although it’s called social responsibility, is that it gives the full picture. Everything is there, really is not, because I was involved and I was involved as a representative of a Brazilian NGO association that was part of the Brazilian process and representing this group of Brazilian NGO’s. I became part of the drafting team at the global level. So I was involved in the actually drafting team representing Brazilian or South and Joes. So we have a representative, representation process within this big group, Global Group and I was one of the representatives of South developing Country and NGOs. So, so just to make clear how I was there, but anyway. So ISO 26,000 is this rich thing. The problem with this is that it’s not easy to certify, it’s not certifiable because it’s so complex. So we can make check boxes for everything and the decision was to make it as complex as it should be even if it will not be a commercial success. So because it’s difficult to use and now we are looking for easier solutions, easier to implement, because companies have a very, very explainable and justifiable difficulty in embracing complexity and embracing such difficult things. So companies are very complex mechanisms based on very simple rules. That’s what makes a company works. So it has to be simple, the rules has to be simple the criteria of success should be simple. Everybody care should be able to understand what’s what’s success and what’s not, what’s success and so how to translate this into something that’s usable by companies. It’s what’s happening now. And so I think it’s very important to keep an eye on ASO 26,000 while designing new tools and while designing new standards. And in, let’s say to make a headline, I will say that what’s, what will happen now about standards is that companies will be asked to choose between what is right and difficult and what is easy but won’t deliver. So that’s the moment of choice that you are facing now. And my biggest concern is if too many people go to the easy way. We may end with the feeling or the illusion that we are doing what’s needed to be done, while actually not doing enough and ending with the same problems we started with. |
| Joana | Very, very interesting, and I imagine how complex it must have been to have put all the effort in this work, and especially to translate such complex indicators into simple rules so that companies can understand. It must have been a very difficult task and and and congratulations and and thank you for giving your contribution in this work and and it’s not the only milestone that you have because you also being a partner at ABC Asociados you were the technical responsible for initiatives such as the ISE B3 the Brazilian Stock Exchange, Corporate Sustainability Index. So I imagine that must have been also very complex work. Can you explain us a bit more about this experience and the importance of this index? |
| Aron | Sure, sure. So these things happen more or less at the same time. It’s interesting to think about it now. So easy. We call it easy. It’s not easy, but it’s easy. It’s ISE, it’s easy. So ISE B3 is the 4th index of its kind in the world. So the first one was Dow Jones in 1999, then it came Footsie in 2004 or 2003, then 2004 we have Joburg, Johannesburg Stock Exchange in 2005 we have ISE from B3. So. So it’s a very early and very pioneer too. And it was developed at the time as, let’s say as an experience, an experiment from the Stock Exchange triggered by a lot of people that were already involved in the social responsibility and in the responsible investment world ecosystem, so. It was. It’s a very early tool and what happened with ISE at that time it was developed by the FGV from Fundacion Getulio Vargas, the Center for Sustainability students, Jvss, which is a center here in Sao Paulo, connected to or belonging to Fgv to the Sao Paulo Business School where I studied and did my PhD. So in this, the idea there was to translate into let’s say the most clear and detailed check boxes and closed questions, the main topics to assess the, let’s say the performance or the alignment of companies policies and and the practices with sustainability. So the idea behind ISE is to not to assess performance. So we are not measuring performance of the companies, but we are massing, measuring the assessing the alignment of policies and practices and some other indicators that we may check in terms of let’s say the actual actions, but not measuring performance in the whole in face of social responsibility or sustainability. So the same, the same content is there. And the way we do that is by making different dimensions. So we cut the issues in different dimensions and we did this in a very open way. So we have a lot of companies discussing, number of stakeholders discussing that. So we made an instrument that is very broad. So and we revised this year after year. In 2019 FGV stopped to do this, the as you said stopped to do this kind of activity. So they focus in more research areas and then we ABC started as a spin off let’s say and doing this work and we still do that for B3 until now and I hope we still do it for a long time. So we are a service provider to be 3 and working with easy. And then the thing there and the essence of easy is the questionnaire which is let’s say very broad and has been revised year after year and updated. Now the most recent one, it is, it says it varies a lot depending of sectors. So it has a sector approach, it’s very aligned with GRI so and also now it makes a lot of a big alignment with SASBI as well. So it’s connected to the to the main guidance align with ISO 26,000 also. So it’s something that we try to bring in these questions. So and it’s an open questioner, so everybody can have access to it. So it’s available online. If you go to iseb3.com.br, you anyone can have access to the, to the, to the cash owner and the methodology and also and that’s something new. You can have access to the assessment of every company that have participated in the selection process in the last two years. So it’s already there and everyone can actually it’s one year because second year is now of the new methodology and the results are open. So but everybody can have access to it and to see how the companies are performing. How many points each company have and everything. So it’s a very open thing and I think it’s a contribution for everyone. |
| Joana | Definitely, it’s definitely a contribution and I’m sure that ISE was not an easy task. So, congratulations on that because I know it’s it’s such an important index and it for sure gives a great contribution to all the companies that use this methodology and I could, I mean you have an amazing CV, so you have a lot of initiatives we could be here the whole day. But besides these two milestones, you also did a very interesting research that got my attention about the perception of ESG by Brazilian SME’s. You did this for Sabri, right? For the Brazilian service for entrepreneurship development. And the awareness of SME’s regarding ESG is something that is fundamental right because most of countries are countries of SME’s and most of them don’t have the resources or enough knowledge to to start their sustainability journey. So what were your main conclusions about this perception of ESG by Brazilian SME’s? |
| Aron | Yeah, this is a very, very interesting research. We interviewed something like almost 4000 companies in the whole country. It was a very, very broad and and it is really covering the whole Brazil. So it’s very, very interesting in this sense and we have some regional conclusions and can compare different profiles. So it’s a, it’s a very interesting thing. It’s not published yet. So I can spoil everything because we we just finished now in in February the report and now so, but I is working in the publication so it’s not published yet but. What I can advance is that and the very interesting find is that SME’s are not aware of the acronym ESG. That’s we we were expecting to have a much broader knowledge of the expression ESG, but the actually it’s a minority that have heard. The acronym or even blast those that thing, they understand and know what it is. So that’s a curious thing. And the same goes to SDGs that are more knowledgeable SDGs but not as much as we would expect as well, so the naming, the acronyms that we the bubble we use and we take for granted they are not reality for the vast majority of SMEs in Brazil. But in the other hand, and that’s the good news, the vast majority of the SMEs they do have or they declare to have concerns about social, environment and governance issues. And they also declare to have actions based on that. So they are doing something and we have some examples of what they declare they are doing in the research. So the the underlying sense is that despite they are not that aware of the let’s say technology or the trendy things in the sustainability. The people making this SME’s, they are part of society and they have been touched by the sense of urgency that something has to be done in terms of social, environmental and ethical governance issues in or production and consumption system. So they are aware of that and doing something about that in their companies. Another curious finding is that, for instance, the correlation between stakeholder pressure and the action by the companies or concern by the companies is very small. We were expecting to find and we will maybe explore that more in academic perspective to find a correlation between the companies experiencing pressure from their stakeholders mainly clients and customers and the level of action and we identified no very big correlation in this sense. And then maybe the the main reason is that despite having pressure most of the companies declare they are doing something and they are already concerned. So where so maybe the pressure get to the people. By the open channels of society rather than by their stakeholders. That’s more or less a feeling. So it’s a very curious thing. We’re still working on that. |
| Joana | It’s very interesting what you just said, that they feel more pressure from society than from their stakeholders. |
| Aron | Because that’s a feeling that that’s a feeling. It’s not a scientific conclusion yet, so. |
| Joana | Yeah, yeah. But it, but it’s very, very, very interesting because, here in Europe the European Union legislation is getting very demanding regarding on financial reporting at the moment, mostly the large companies are the ones that are obliged to report on this non financial information, but is affecting a lot and pressuring a lot their supply chain, which most of them are SMEs. Also to integrate this ESG criteria and I wanted to ask you in your opinion, do you think that large companies have the responsibility to support their supply chain thinking about SMEs in this transitioning to a more sustainable business model besides pressuring like supporting them and guiding them through this journey? |
| Aron | Yeah, I think they actually need to do that. So it’s in the sense that it’s in their interest to provide the support rather than just pressuring putting pressure on the companies. And I think that if one things that as I just said that these companies are somehow already feeling that the small companies. They are feeling the concern. They are part of society. So they are seeing that there is there are concerns about social, environmental issues. They, they these companies would like to move forward and at the same time they have this pressure of survival. So as in everywhere SMEs they struggle to survive as in a daily basis because they don’t have capital, they are very subject to changes in the market, so very sensitive changes. So in the other hand they are flexible or they can adapt more quickly. So they are less complex in terms of management. So there are a number of of good aspects of you and you looked in SME in terms of adaptation to sustainability, so I think that for big companies it’s not an obligation but it should be a business opportunity to develop well and to channel the anxiety of your suppliers to actually adapt to what’s happening now and we also shouldn’t forget that we have this generational change. So we have a lot of people now in 30-40 years old, the G generation and so on. They have a different perspective on what’s happening in the world. So they’re not like their parents that were born Cowboys. So they they are, they are born astronauts. And they have a different perception of the world and of the rule. So of course an old cowboy would be difficult to change and to make him behave well in the spaceship. But the the the born astronaut, if you give him the tool or her the tool, it will he or she will will will feel compelled and and happy and glad and grateful to engage. In your new ways of production and consumption. So I think it’s an opportunity to engage with new generations of entrepreneurs and also of investors because we know that the same generation in the other side, in the money side, the investing side, they are also concerned about what their money is being used to and what the impact the investments are creating in the real world. |
| Joana | Thank you so much and I’m really excited to know that I was born an astronaut according to your expression and thank you so much Aron for your most valuable inputs. And lastly, we always make this question to our guests, who would you like to see here interviewed at ATALKS? |
| Aron | OK, I think that one person that would be very interesting to hear about is a guy called Dan Ozursky. Dan was working with the B lab, the system in the assessment of impact, so about benefit and B Corporation and impact. And now he moved to this recently founded Foundation that exactly working on the work of developing the work of George Cerefine and others from Harvard in the measurement of impact. So, I think that the frontiers are impact measurement and materiality assessment. So I think this is the frontiers and so Dan will, Dan will be a good guy to talk about. He has a lot of experience and another person that may be interesting to talk about someone that’s involved in this double materiality versus versus financial materiality debate. Which I think is also central to the future and to, let’s say, putting apart what’s right and what it’s easy and maybe you could bring some people from GRI and ISSB together maybe to make a double interview. |
| Joana | Great suggestions, Aron. I’m sure we’ll take it into account. Thank you so much. This was a very inspiring interview and thank you so much for your most valuable inputs. It was great to have you here. I hope that we have more opportunities so you can share your contributions. And for everyone who’s listening, I hope that you have enjoyed it and see you in the next ATALK. |
| Aron | Thank you very much, Joana, and thanks all for listening. |
| Joana | Thank you. |
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