Arquivo da tag: ESG

The power of SDG 17: collaboration as the base of a resilient future

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The article was originally published on the website ‘Um Só Planeta’ 

by Guilherme Sylos, Prospection Director at IDIS; and Marcel Fukayama é  Co-founder of Sistema B Brasil and Member of the Board at IDIS.

Collectivity has always been an important value for society’s advancement. No wonder, it is part of the popular imagination in children’s tales and fables and through sayings like ‘unity makes strength’. It is not surprising the almost intuitive effort of adults to teach young people from an early age the importance of collectivity, as life in society is intrinsically linked to collaboration and mutual support. That principle, as basic as it may sound, needs to be constantly reinforced so that we can reach common resolutions for shared problems.

The United Nations (UN) considered this when defining the seventeen Sustainable Development Goals (SDGs). The concept is heavily reflected in SDG 17 – Partnerships for the Goals, which highlights the importance of partnerships as a means to accelerate and ensure sustainable development. It is precisely this last SDG that underlies and strengthens all the others.

However, data from the Brazilian Institute of Geography and Statistics (in portuguese, Instituto Brasileiro de Geografia e Estatística – IBGE), reveals that, of the 24 indicators monitored by Brazil related to SDG 17, only six have been fully elaborated so far, while thirteen of them are under development or analysis. With only six years left to achieve the goals of the 2030 Agenda, partnerships could be our answer to find part of the missing solutions by combining resources, knowledge, and experiences.

Creating connections between governments, companies, and organized civil society generates the strength to face challenges that would be insurmountable individually. Let’s consider, for example, strategic philanthropy. As the name itself suggests, it involves the strategic allocation of private resources for public benefit. These resources strengthen initiatives and solutions that would not always be feasible solely through state efforts, in addition to being more flexible, allowing the use of experimental approaches and the development of creative solutions to complex problems. The practice, in itself, is already very powerful when it comes to social impact.

It turns out that strategic philanthropy can be even more effective when supported by strong partnerships with other sectors, rather than remaining closed in on itself. Collaborations enhance the impact made by initiatives, making them more long-lasting and sustainable. 

While governments hold regulatory power and public sector resources, philanthropic organizations contribute with a strategic view, agility, and private resources that promote social impact. Civil society, on the other hand, brings a direct perspective from the community, guiding the final allocation of resources and ensuring that solutions are truly aligned with the needs of the population.

One example that highlights the success of this type of partnership is Together for Health. Launched in 2023, the Program is an initiative of the National Bank for Economic and Social Development (BNDES) managed by IDIS. In partnership with private donors, the Program seeks to gather funds to support and strengthen the Unified Health System (SUS) in the North and Northeast regions of Brazil. The perspective is that, by 2026, approximately BRL 200 million non-reimbursable (BRL100 million from partners and BRL100 million from BNDES) will be allocated to health projects that aim to benefit care activities for populations living in these regions of the country, including primary care services; medium and high complexity; urgent and emergency services and diagnostic support. For every real donated by other institutions, BNDES contributes with another real, in a matchfunding style.

The challenge is not simple, since managing these many stakeholders is a complex operation. To achieve the goal of Together for Health, it was necessary to create multiple connections between the private initiative, the public sector (Ministry of Health, municipal and state health departments) and civil society organizations that will be responsible for executing the projects supported by the Program. So far, the program has already allocated approximately BRL 96 million in resources, aimed at three projects that, together, will reach more than 300 cities.

Another great brazilian example of collective action and networking on behalf of structural changes is the global Catalyst 2030 movement, composed of about 127 social entrepreneurs and innovators committed to improve the achievement of the Sustainable Development Goals (SDG). In Brazil, the group joined in 2023 the ‘National Strategy Committee for an Impact Economy ’ (in portuguese, Comitê da Estratégia Nacional para Economia de Impacto – ENIMPACTO), to which it presented a proposal letter of how the network can contribute even further with public policies and the strengthening of the solutions. 

An additional example highlights how the partnership between the corporate sector and the social sector can create new paradigms. In 2023, three B Corps: real estate developer MagikJC, insurance company Gaia Group and venture builder Din4mo, created the Organized System for Affordable Housing (in portuguese, Sistema Organizado para Moradia Acessível – SOMA), a non-profit organization that aims to offer social housing in urban centers.

The project has raised BRL15 million in an operation in São Paulo’s Stock Exchange Market (B3) in a real estate receivables certificate (in portuguese, certificado de recebível imobiliário – CRI) with investors such as Gerdau, Votorantim, Dexco, Movida and P4 Engenharia. The resources raised enabled the construction of a building in Largo do Arouche and is now providing social living services to vulnerable families. 

We must recognize the essential role of joining forces and resources as well as collaborative work so that we can move towards a more inclusive, equitable and regenerative future.

Study indicates a correlation between good practices of Private Social Investment and the ESG agenda

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Since aspects related to socioenvironmental impact and risk assessment started to integrate into the business strategy of an increasing number of companies, we have seen the market turn upside down and the subject gain strength and scale. It’s evident that the idea of sustainability and corporate social responsibility is not new, but the market logic has certainly changed since it was suggested that resources allocated to socioenvironmental projects of public interest should no longer be seen as expenses, but rather as investments that bring short, medium, and long-term returns. This is what we call private social investment – or strategic philanthropy, integrated into an ESG agenda.

We understand that private social investment practices have high penetration and can substantially enhance a company’s socioenvironmental actions. In other words, when done well, social investment can help unlock various other aspects of a corporate sustainability agenda. Empirically, the Third Sector has been working for years to demonstrate the impact that private social investment can have on an organization’s ESG metrics, especially in the social field.

To prove this hypothesis, IDIS – Institute for the Development of Social Investment undertook to analyze the correlation between private social investment and the scores of the brazilian stock exchange’s Corporate Sustainability Index (in portuguese, abbreviated as ISE B3). Established in 2005, it is currently the largest sustainability index in the country and was the fourth to be created globally, undergoing periodic revisions and analyses according to societal and market demands.

The companies included in the Index are chosen annually based on a ‘best-in-class’ process — a term used to describe practices or processes considered the best compared to market standards. The Index questionnaire is based on SASB Standards and maintains consistency with the Global Reporting Initiative (GRI), one of the world’s leading ESG measurement standards.

The survey analyzed the 2022-2024 triennium of companies included in the index, and during the evaluation period, it was very rewarding to identify that the practice of private social investment consistently ranked among the top ten topics most correlated with the ISE B3 score. In other words, companies that perform well in strategic philanthropy tend to excel in overall corporate sustainability.

It is also interesting to note that private social investment practices are aligned with aspects such as ‘foundations of corporate sustainability management’, ‘business ethics’, and ‘trends and purpose’. The alignment with topics that naturally have greater cross-sectional relevance indicates the tactical nature of private social investment in formulating and implementing integrated corporate sustainability strategies.

A private social investment strategy aligned with an ESG strategy helps to materialize the organization’s purpose for its stakeholders, generating tangible results for both the company and society. A company’s investment in socioenvironmental projects can be a good way to engage different stakeholders and initiate collective agendas with the government and organized civil society, promoting benefits for both society and businesses. Furthermore, it helps companies clearly and robustly demonstrate their socioenvironmental commitments, signaling to the market and consumers a real commitment to different causes.

Despite seeming logical, this alignment is not an easy task. In addition to connecting actions with business challenges and brand purpose, strategic action must consider material business aspects and a thorough mapping of stakeholders and different ways to engage them. Moreover, socioenvironmental actions should complement efforts undertaken by the Third Sector, promoting exchanges that enrich the performance of all actors. Study data shows that this is a relevant task that should be given importance by the private sector, as it is highly correlated with comprehensive corporate sustainability management.

 

Other findings

Regarding the scope of this study and the adoption of private social investment practices, some results stand out. For example, the most adopted actions in 2024, representing 93% of the 85 companies that responded throughout the triennium, were:

–  Considering collective agendas, such as SDGs, as a general reference for defining social investments;

–  Working in partnership with the community and other stakeholders in the formulation or execution;

–  Valuing the leadership of local actors and strengthening civil society;

–  Contributing to the participatory construction of public policies and/or collective sustainable development agendas.

Additionally, it was identified that the performance in private social investment topics is slightly better, both in average and median, in companies that operate, where applicable, through philanthropic vehicles, such as a foundation or corporate institute with its own structure. There was no statistically significant difference in total ISE B3 score performance between companies operating via philanthropic vehicles and those that do not. We can establish that scoring well in corporate sustainability is possible even in the absence of specific philanthropic vehicles. However, these vehicles remain important structures (alongside endowments, another modality capable of fostering co-investment) that mark firm corporate commitments in the face of numerous social dilemmas and issues. They will be even more effective if they can connect their areas of focus to the business, constituting important elements to boost the growth of a broader and deeper ESG agenda linked to purpose that permeates the entire organization.

In topics involving consultation with stakeholders to define investment priorities and maintaining open channels with the community, the difference between companies that claimed not to adopt such practices and those that do was more than 10 points. Companies that emphasize the leadership of local civil society actors in their private social investment actions demonstrate considerably superior performance compared to those that do not consider this aspect. Local dialogues, consistent positive social impact aligned with the company, open channels, and transparency in private social investment move the needle and demand new perspectives from companies. However, companies need to further advance this agenda, seeking ways to engage with local actors, working in partnership with the Third Sector in a complementary manner. Private social investment plays an important role: by building relationships focused on the community and surroundings, in line with internal company guidelines and demands, socio-environmental investment strategies are more assertive, targeted, and promote improvements in territories.

Another discovery is related to the practice of impact assessment by companies. Companies that assess the results of initiatives supported through private social investment have a higher performance in the ISE B3 and also showed a relatively high increase in performance between 2022 and 2024. In practical terms, systematic collection of impact indicators allows for reflective and strategic examination of the efficiency of a given social intervention, thereby enabling periodic review and improvement aimed at maximizing the desired and generated social benefits. Often, social projects end up generating unintended positive impacts that would go unnoticed without an evaluation that takes into account, for example, the beneficiaries’ perception of the changes in their lives.

In summary, we empirically know that by connecting the concept and practices of private social investment with the organization’s purpose and institutional values, considering the economic bias of the business and the perspective of key stakeholders regarding the socio-environmental value to be created by the company, it is possible to enhance the organization’s capacity to generate positive impact for society and real value for the business. This relationship is now quantitatively proven, considering an extremely relevant sample of Brazilian companies.

IDIS maintains the view that to catalyze lasting social transformation, Private Social Investment must be accompanied by a robust strategic planning, grounded in specific data and indicators, implemented with precision, and accompanied by monitoring and evaluation of its results and impact.

Access the full study, available only in portuguese here.

Socioenvironmental: the integration of social and environmental spheres

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The pursuit of sustainability has become a fundamental goal for organizations, considering its value to society and the preservation of natural resources and the environment, as well as its benefits for organizational development and growth. This pursuit encompasses the economic, social and environmental spheres, which, although often addressed separately, are highly interconnected.

The current trend towards adopting sustainable practices is further driven by the urgency of climate change. According to the Sixth Assessment Report of the Intergovernmental Panel on Climate Change (IPCC), climate change is undeniably caused by unsustainable energy use, land use changes, unequal consumption and production patterns, and lifestyles, resulting in high greenhouse gas emissions. These changes have already caused a 1.1ºC increase in the planet’s average surface temperature compared to pre-industrial levels. Their impacts range from human health and well-being to biodiversity and ecosystems.

 

But how do the environmental and social spheres intersect?

In general, it’s true that all economic activities have some environmental and social impact. With the evolution of corporate sustainability, now incorporated into the ESG (Environmental, Social, and Governance) agenda, organizations seek to mitigate their impacts within the social and environmental spheres through initiatives ranging from diversifying product and supplier portfolios to engaging stakeholders and implementing private social investment (PSI) actions. The complexity of the correlation between the social and environmental spheres necessitates equally complex initiatives.

While the environment is commonly understood as the natural world elements (water, air, soil, plant and animal biodiversity), its concept is broader. It typically includes not only these natural elements but also the relationships between people and their living environment, considering political, economic, cultural, and health aspects. Thus, addressing environmental initiatives inherently involves an integrated approach that also considers the social dimension.

Changes in the social sphere often correlate with environmental impacts at various levels, and vice versa. Among the various possible impacts and correlations, the following example focuses on water-related impacts, specifically alterations in water resources:

The interconnected functioning of these spheres is evident through this example. But could an environmental project operate, even in a remote location, without direct interactions with society? Initially, it may seem possible; however, considering the systemic impacts of the environment — namely, the natural environment and its relationships with society — it becomes clear that the interdependence of these concepts is inherent. The same applies to social projects; it is necessary to consider environmental factors.

Therefore, the need for a joint approach to these spheres is evident. Failing to consider the socio-environmental interconnectedness within projects and initiatives diminishes their effective impacts and their ability to reach broad audiences. The Intergovernmental Panel on Climate Change (IPCC) has emphasized the importance of integrating all sectors of society and implementing cross-cutting actions that address the complexity of interdependencies among climate, ecosystems, biodiversity, and human societies, particularly concerning climate change. This also applies to socio-environmental integration.

 

The role of philanthropy and Private Social Investment

The interdependence of spheres and, consequently, the causes associated with each of them, form a complex issue in which philanthropy and private social investment are already well equipped to act, without losing focus on the beneficiaries, namely those most affected by socio-environmental damage.

In our material, Perspectives for Brazilian Philanthropy 2024, we address the poly-crisis generated by this interdependence of spheres, highlighting the cross-cutting nature of causes and responses, and emphasizing the incorporation of these themes into our ecosystem’s strategic approach. Including connections, stakeholders, causes, and consequences in projects enables more informed decisions for generating structural changes.

This cross-cutting approach can be observed, for instance, in the Water Grant from the Mosaic Institute, which encourages community projects focused on water resource management and sustainable agriculture.

In the 2024 grant, the Institute offers up to R$45,000 for at least 12 projects contributing to SDG 6 – Clean Water and Sanitation – of the UN’s Agenda 2030. Projects aim to promote best practices in water resource management, increase access to water and sanitation, expand sewage and water treatment systems, preserve and restore water-related ecosystems, provide professional development for civil society organizations, and foster intersectoral cooperation.

 

IDIS in promoting socio-environmental action

Through well-planned and monitored private social investment, companies can navigate the interplay between Social and Environmental aspects, demonstrating their socio-environmental commitment to key stakeholders. Furthermore, they can engage stakeholders in collaborative processes to address complex social and environmental issues.

IDIS provides technical support to families, companies, and social organizations looking to initiate or enhance their private social investment with an integrated view of Environmental and Social aspects. We operate in a customized and participatory manner across six areas of action.

For more details, please contact us at comunicacao@idis.org.br

The ‘S’ of the Brazilian ESG will not evolve without dialogue with CSOs

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The B3 (Stock Exchange in Brazil) revealed last year that it would have new rules for its Corporate Sustainability Index. The changes in the ranking stemmed from pressure from investors so that the companies evaluated became increasingly attentive to ‘ESG’ actions (Environmental, Social and Governance).

Following the announcement, B3 started to openly publish the scores of the 73 organizations participating in the index. Dimensions such as human capital; corporate governance and senior management; business model and innovation; social capital and environment were all disclaimed.

Among the top 10 companies, the dimension with the lowest average rating was human capital, which includes issues such as diversity and labour rights – followed by the social capital index, which covers the topics of private social investment and community relations. Both represent, not only, but essentially, the ‘S’ within ‘ESG’.

The findings reveal a weakness in materializing actions, measuring achievements, and an unclear commitment to social transformation. A study by BNP Paribas (ESG Global 2021) revealed that 51 per cent of investors surveyed considered the ‘S’ the most difficult to analyse and incorporate into investment strategies. Another analysis, carried out by the Global Reporting Initiative (GRI) in partnership with Deutsche Bank, shows that only 14 per cent of the ‘social’ ratings compiled by the GRI are aimed at investors. In contrast, 97 per cent of environmental ratings and 80 per cent of governance ratings have investors as their primary audience.

The next step for Brazilian companies

Facing this scenario, what should Brazilian companies do to evolve on the social agenda in their ESG practices? The answer is not simple, nor is it unique. Among the options, there is a great opportunity for companies to rethink the way they dialogue with communities, and the role of grantmaking and strategic philanthropy, promoting social transformations aligned to the business.

As a trend, we see a raising involvement of CSOs in companies’ initiatives and, more than that, a transfer of knowledge from the social organizations to their investors, instead of the other way around. Projects are developed in collaboration, and direct investment is made on CSOs, which can increase their influence and capacity for execution and transformation alongside beneficiaries.

The pandemic showed that in the most difficult moments, problems are concentrated in the most vulnerable populations, whether due to the precariousness of the system or to the lack of work and income. At the same time, the experience made it clear that they were the ones most capable of finding the best solutions. Proofing points are the gigantic mobilizations conducted by community leaders during the emergency, such as those carried out by CUFA (Central Única de Favelas), which provided basic needs such as food and PPEs and promoted entrepreneurship in favelas across the country.

The connection between the ESG Agenda and philanthropy can no longer be invisible or ignored. A Census conducted by Gife in 2020 registered an increase of 11 percentage points in the number of social investors focused on ‘strengthening civil society’ in relation to the 2018 survey. Instead of creating new and promoting their own projects, companies should choose to strengthen grassroots organizations, which are more likely to act faster, more precisely and promote the changes we long to see.

Renato Rebelo was the Project Director at IDIS.