ESG - you need it! (?)

There are many talks about the importance of sustainable growth. This is what top managers, politicians and experts of large companies say at various forums, discussion panels and interviews. But then why do most people still rarely think about how important all these questions are? I believe that the main reason for this is that most professional discussions on this topic are simply incomprehensible to many people because they use too specific terminology, concepts, etc.


That is why I believe that in order to bring this issue to a wider audience, we must pay attention to more detailed and clear explanations of such new concepts.

ESG - что это такое, и для чего это нужно знать украинцам
Фото взято: https://risk-practice.ru/news/

The abbreviation ESG means environmental, social, governance - environmental, social and managerial sustainability. This is an approach in which entrepreneurs, investors and financial institutions choose such projects and are guided by such principles that allow them to develop their business not only by caring about financial indicators but also about the social and environmental aspects of their activities. It can be described as a responsible business with a view to future generations.

"By 2050, there will be 2 unemployed people on the planet for 1 working person"

Still, a few words about sustainable development, because achieving the goals of sustainable development is the basis of ESG. According to various studies, the analysis of the level of development that we have reached today, by 2050 on the planet Earth will be 2 unemployed people per 1 working person. This means that it will be extremely important to achieve such a level of productivity that the entire population of the planet was provided with everything necessary from food to all the necessary goods to which mankind is accustomed to having access in everyday life. It will also mean that further development is also possible.


According to a study conducted in 2016, by 2030, the total population living on earth will need an additional 35 per cent of food, 40 per cent of water and more than 50 per cent of electricity in addition. Given all the changes taking place in the world today, this will not be easy to achieve. It is enough to analyze the energy crisis that is looming in the world today. Ukraine has its own special context, but global trends will not escape it either.

Ukraine has its own special context, but global trends will not escape it either.

That is why humanity must think about how to preserve the existing potential and how to expand it in the future through technology, economic and a reasonable attitude to the resources that exist today.


So, more about ESG - Environment, Social, Governance. Using this abbreviation, many companies invest in it the meaning of the principles of doing business, and fidelity to these principles in the company's activities. It is a kind of corporate responsibility of business to society, future generations and the planet as a whole.


Every company or even country has its own approach. In order to be able to assess progress in this direction, the criteria for assessing the progress of companies in achieving progress, entitled "17 Sustainable Development Goals", were developed and approved on September 25, 2015 by the UN General Assembly.

Фото взято: https://lb.ua/blog/svitlana_kovalivska/

Recently, Yanina Olkhovska from Ukrsibbank said in a comment that "companies that do not meet investors' expectations regarding ESG risk losing access to capital markets." UKRSIBBANK is currently conducting a pilot project to evaluate the ESG practices of its corporate client. The idea, according to Yanina Olkhovska, is to offer borrowers a single approach to ESG valuation that will give them access to individual financing. This approach by financial institutions can have a significant impact on companies that need financial resources and motivate them to implement ESG principles faster.


In Ukraine, several companies are already very active in implementing the principles of sustainable development, including DTEK, Metinvest, MHP and others. And there will be more and more such companies every year because this is a specific trend that is recognized by the world.


Separately, in the same context, it is worth paying attention to the so-called "Green Agreement of the European Union", or the so-called European Green Deal. Recognizing the seriousness of climate change in the world and the negative consequences it may have, the European Union has agreed that the common strategic goal of all EU member states should be to achieve carbon neutrality. At the same time, formulating such a policy for members of the European Union, the EU also sets requirements for countries that want to work or export their goods to the internal market of the European Union.


One of the requirements for companies that will import their goods and services to the European Union will be the use of renewable energy sources in their activities. Today, there is an active discussion on the introduction of so-called "green certificates" for exporters to EU countries. These are documents that confirm that the company buys electricity that is obtained from renewable sources or has its own generation from a solar power plant, wind farm, biogas plant and more. In the absence of such certificates or the insufficiency of those volumes of electricity obtained from renewable sources, such companies will be forced to pay additional duties or additional payments when importing goods into the European Union.


Today we are actively working with various industrial companies, designing and installing solar power plants for their own energy consumption by such enterprises. An additional, and often the main incentive today, for the placement of solar power plants on roofs, or simply the territory of such enterprises is a purely economic effect - the constant rise in electricity prices makes the return on investment from renewable sources a very attractive investment. The payback period can reach 2.5-3 years.


Using solar energy technology, companies save on their own electricity consumption, getting much cheaper electricity for their own needs. At the same time, they actively influence the reduction of the negative impact of traditional sources of electricity, such as thermal power plants that burn coal and the like.


Dmytro Nechyporenko,

Business Development Director VOLTAGE

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