• How can Chilean companies stay updated on ESG issues?

While the concept of ESG might be new, the underlying reality is not as much. There are many organizations that have been taking responsibility for their environmental and social impacts for a long time, and they have been creating value, both social and environmental, beyond their regular activities to achieve profitability.

The triple bottom line approach has been in existence for several years, and it is remarkable to observe how it serves as the driving force behind many new ventures in Chile. It is particularly evident that younger entrepreneurs are establishing businesses with a vision that incorporates the triple impact logic right from the outset.

Another significant issue is that of Corporate Governance. With the introduction of regulatory changes, especially the Law on Criminal Liability of Legal Entities, the subject has undergone rapid development over the past 10 years. Collusion scandals, instances of illicit financial activities intertwined with politics, and other similar incidents have served as valuable learning experiences, prompting a substantial shift in practices. A decade ago, the comprehensive set of compliance policies and mechanisms that are now commonplace in Chilean companies was virtually non-existent. Only foreign companies, regulated following the scandals at the turn of the millennium (such as Enron and Worldcom), had already implemented these advancements in Chile. These developments encompass a range of measures, including anti-corruption policies, employee training, hotlines, and the declaration of conflicts of interest, among others.

The newer issues revolve around gender equality, diversity, and inclusion, which have gained considerable momentum from the international agenda, particularly through anti-racist waves and the Me Too movement in the United States.

Until recently, very few companies unrelated to natural resources had committed to developing environmental impact management. However, the climate crisis, starting with the Paris Agreement, has also accelerated this awareness. Today, it is difficult for a large company, regardless of the sector, to refuse to measure its carbon footprint. And in a short time, all institutions will have to make their contribution to ensure that Chile becomes a carbon-neutral country before 2050. By 2030, we would need to reduce 50% of our greenhouse gas emissions, and that deadline is rapidly approaching. What we have not done voluntarily will be required by law.

Like everything in Chile, advances in sustainable development are being driven more by regulatory and legal pressures than by market or reputational incentives.

Regarding the anti-ESG crusade in the United States, a total of 15 states have enacted laws against these criteria. Currently, California is the only state planning pro-ESG legislation, joining the other four states that already have pro-ESG regulations. What are your thoughts on this?

The US economy has been facing a prolonged crisis. The competition from economies with minimal labor, legal, and environmental standards has led to stagnant or falling wages and the loss of millions of jobs. It’s understandable that economic, political, and social actors feel frustrated. The quick solution seems to be accelerating economic growth without sustainability requirements—a free-rider strategy that, while understandable, poses a threat to the future of humanity due to the climate crisis. Moreover, increasing social inequality puts the future of globalized capitalism at risk.

However, there is a global perspective to consider. Even from within the United States, prominent business leaders (such as the Business Roundtable) are recognizing the need to generate value for all stakeholders, not just profits for shareholders. This shift aligns with the concept of sustainable development, which is also advocated by organizations like the World Economic Forum. Failing to embrace sustainable practices may result in a loss of legitimacy for the current model in the long run, or even sooner.

• What is the new Azerta Purpose & ESG area that you direct about?

The new Azerta Purpose & ESG area that we focuses primarily on guiding companies in establishing their Corporate Purpose. In contrast to the brand’s purpose, which is typically approached from a branding perspective, Corporate Purpose is aligned with the organization’s business model and strategy. It aims to answer the fundamental question: What contribution does this organization make to its stakeholders, including shareholders, customers, and employees, as well as the community, society, and nature? Every business generates impacts in these dimensions, and it is crucial to address them. By defining a clear Purpose, companies can achieve higher levels of coherence and alignment. Typically, there is a significant deficit of both coherence and alignment within companies, which often leads to missed opportunities across various aspects.

The second part of the name (ESG) refers to the sustainability factors, namely Environment, Social, and Governance, which companies are obligated to report as required by investors or regulators. This presents an opportunity to develop sustainability models and strategies that align with the corporate purpose, organizational culture, and branding. Our role is to assist our clients in achieving coherence across all these areas, which are typically handled separately by different departments within organizations. By integrating and aligning these aspects, we help our clients create a holistic and consistent approach to sustainability that supports their overall objectives.

We have encountered many cases where the lack of collaboration between different areas within organizations has resulted in independent and disjointed approaches to these designs, to the point where they appear like different companies. Synergistic integration lies at the heart of what we do.

As for the impact of working on ESG issues on companies’ access to financing, it has become increasingly significant. Many investors and financial institutions now consider ESG factors as essential criteria when evaluating investment opportunities. Companies that demonstrate a strong commitment to sustainable practices and responsible business conduct are often viewed as more attractive to investors and lenders. By incorporating ESG considerations into their strategies, companies can enhance their reputation, mitigate risks, and gain a competitive advantage in accessing financing. This trend is expected to continue as sustainable investing becomes more mainstream and stakeholders increasingly prioritize organizations that align with ESG principles.

Internationally, the impact of working on ESG issues on companies’ access to financing is significant. However, in Chile, the industry of sustainable investments and the consideration of ESG factors in investment decisions are not yet as well-developed. Similarly, certification processes in the country may not have a strong reputation for transparency compared to some other countries.

Nevertheless, there is a notable shift towards managing and reporting on ESG factors in Chile. This shift has been influenced by reporting requirements from the CMF (Financial Market Commission) for companies listed on the Stock Exchange. This regulatory development has marked a significant turning point in many sectors. Industries related to natural resources, such as large mining, forestry, and electricity sectors, have been more advanced in sustainability management due to the importance of meeting market requirements and certifications.