ESG Commitment

ESG in business: what companies are doing to be more sustainable

Companies are increasingly adopting ESG and showing commitment to promoting environmental responsibility, social initiatives and responsible corporate governance. According to the 'ESG Market Navigator' survey carried out by Bloomberg Intelligence, in 2023, 84% of respondents said that ESG factors help to have a more robust corporate strategy, as well as being beneficial for the company's reputation and facilitating access to capital.
There are several ESG practices that companies can adhere to. Among the most common are recycling, the use of clean energy (photovoltaic and wind), support for diversity and inclusion among employees, charitable campaigns in the communities where they operate, financial and accounting transparency through public reports and the implementation of anti-corruption practices.

 

What are the advantages of ESG practices for companies?

There are many advantages for companies that invest in ESG practices. It's not just a question of ethics or image, but of maintaining positive points of competitiveness and survival. The benefits are:

• Cost reduction;
• Increased revenue;
• Access to capital;
• Risk management;
• Improved reputation;
• Talent development.

How do you measure whether companies are doing the right thing?

 

B3 Corporate Sustainability Index (ISE B3)

In order to analyze the performance of institutions in relation to their commitment to ESG factors, the B3 Corporate Sustainability Index (ISE B3) was created in 2005. It is the fourth sustainability indicator in the world and the first in Latin America. To receive the seal, companies must clearly publish their commitments and criteria, just as Neoenergia published its ESG targets approved by the Board of Directors until 2030.

One of the bases used by ISE B3 is the score awarded to companies by CDP, a non-profit organization. The scoring process takes into account the TCFD (Task Force on Climate-Related Financial Disclosures) framework for the climate booklet. The result shows how prepared institutions are to manage climate and water risks and opportunities, assessing the company's levels of disclosure, awareness, governance and leadership.

In the regulatory field, companies listed on the Brazilian Securities and Exchange Commission (CVM) are required by CVM Resolution 80/22 to report material environmental and social data. The measure provides for new information that may be required of issuers registered in Category A, on the disclosure of certain legal and arbitration claims based on corporate or securities market legislation, or on the rules issued by the Commission.

ESG reporting

Companies can also report on ESG practices adopted internally on a voluntary basis. The Integrated Annual Report, for example, aims to improve accountability and responsibility for the management of aspects involved in a company's operations. Even though it is not mandatory, institutions supervised by the CVM that decide to make this disclosure must comply with the rules of CVM Resolution 14/2020, which refer to CPC (Accounting Pronouncements Committee) Technical Guidance 09/2020.

In this type of report, companies adopt ESG aspect models standardized by organizations, such as the Value Reporting Foundation (VRF), which establishes sustainability reporting methodologies that facilitate the identification, measurement and communication of material aspects relevant to investors. It is based on financial materiality criteria, which can affect the company's profits. Another is the "Global Reporting Initiative (GRI)", which focuses on contributions to sustainable development, with materiality beyond financial aspects, covering impacts on the corporation's different audiences (employees, consumers, society in general, communities, among others).
 

What is Neoenergia's commitment to ESG practices?

Neoenergia has established ESG targets until 2030, reinforcing its commitment to creating sustainable value and operational transparency. Approved by the company's Board of Directors, the most prominent commitments are: reducing the intensity of carbon emissions in their generation; increasing diversity in the company in terms of gender and race in leadership positions; increasing the number of women in electrician positions; and having major suppliers classified as sustainable.

The company's results in ESG aspects are consolidated in annual publications, such as the Annual Report - ESG+F Statement, the Integrated Report and the Fiscal Transparency Report. The ESG targets have been part of Neoenergia's business strategy since its inception and are aligned with its commitments to the Global Compact Principles and the Sustainable Development Goals (SDGs), initiatives of the United Nations (UN).