As consumers and investors are increasingly interested in corporate behaviour in ethics and sustainable development, environmental, social and governance criteria (ESGs) are becoming completely new.
Consumer-oriented scenario
In large enterprises, especially agriculture, the ESG has gained strategic importance. This is driven by investors who are increasingly looking for companies involved in corporate governance, sustainable development and social issues, as well as consumers who are increasingly aware and require socially responsible products.
Many companies used this as an opportunity, seeing the possibility of adding value to their product and increasing ESG data, thus drawing investors' attention. They therefore have certified eggs, chickens, beef and even cereals from certified farms applying sustainable environmental development practices.
Although this improves every ESG report and attracts investor interest, the engine of its creation is a society thirsty for proven sustainable products. By strengthening interest in companies that can certify environmentally friendly products, this also encourages innovation in products that become available to the public.
The involvement of the ESG, in response to the interests of investors, also created a market niche: certified meat and cereals from farms in environmentally friendly practices.
The movement for sustainable consumption largely involves people from generations Y and Z, which are much more involved than earlier generations.
Consumer awareness of environmental responsibility and animal welfare has led to increased availability of natural products, as people stop eating meat and milk products for ideological reasons rather than health reasons.
Thus, agricultural companies have developed and offered products to meet the requirements of this growing consumer sector, combining customer service and environmental sustainability.
Moreover, ESG data from agricultural companies are reinforced by a market driven by environmentally conscious consumers. Although it may be difficult to identify any tangible added value of the product resulting from governance and social aspects, environmental sustainability is a great opportunity, especially in the agricultural sector.
G – (ed. Environmental, Social and Government, ESG, where E – Environment, S – Social responsibility and G – Corporate governance) in ESG can add value to the entire product portfolio through data-based projects that optimise market position and attract consumers seeking environmental-friendly features.
Cost and chance
The perception of costs and opportunities drives a vision and management strategy. Farmers have an advantage over other companies as they place fresh products on the market. They stimulate interest in their origins and attract consumers who care.
Answer questions about origin and the company will start to attract environmentally conscious consumers who are willing to pay more for a sustainable and healthy product. On this background, certified chicken meat appeared, with evidence of origin and methods of breeding.
Eggs have also appeared, which are certified as organic, we can also buy certified beef to show commitment to animal welfare. Not only products of animal origin but also cereal products can be certified as non-transgenic and pesticide-free. Not long ago, the market for these products was small.
However, there is now a growing number of consumers who are actively seeking sustainable products and are willing to pay a bonus. The environmental theme in the ESG can bring the biggest profits to companies. Not only enriches reports that potential investors read, but also adds value to products that sell in premium market niches.
In agricultural markets, unlike other markets, the ESG offers huge opportunities for both increasing sales and domestic investment.
About the author
Luis Felipe Canto Barros - Russell Bedford Brasil, Porto Alegre, Brazil
Luis is head of legal department in Russell Bedford Brazil. He holds a master's degree in international relations law, is a specialist in environmental law, civil procedural law, labour law and labour law. As Head of Legal in Russell Bedford Brasil, Luis is responsible for team coordination and strategic legal decisions.
It plays a significant role in tenders, administrative contracts in Brazil. He also represents Russell Bedford Brasil before the Courts of Auditors and carries out damages, appeals against administrative notices and appeals and defences.