As of November 1st, the National Treasury Attorney’s Office (PGFN) will be looking at environmental, social and governance aspects of companies when negotiating the payment of overdue taxes, extending deadlines, among other measures. The proposal is to negotiate on a case-by-case basis and assess the social contributions of each company. Some companies have achieved significant reductions through the implementation of social projects in the areas where they are located, environmental initiatives for the preservation of the surroundings, projects in schools, and so on. The agreements in this modality follow Administrative Rule No. 6,757 of 2022, which sets the promotion of the company’s social function and the implementation of public policies as the objectives of the tax settlement.
The acronym ESG – E (Environment), S (Social) and G (Governance) – or ASG, in its Brazilian version, has been used since the early 2000s to translate a new business model, based on a set of actions, practices or initiatives to achieve the sustainable development of companies, combining greater profitability, respect for quality of life and a balanced environment, as well as business practices focused on ethics and Compliance. All of this includes relationships with the environment, society, the selection of suppliers and working practices within the company.
In Brazil, the National Environmental Policy, dating from 1981, and the Environmental Crimes Law (1998) are pioneering examples of the government regulating care for the environment, with the intention of making clear the environmental responsibilities of individuals and companies, linked to the compatibility of economic and social development with the preservation of the quality of the environment and ecological balance. Subsequently, the National Solid Waste Policy brought in 2010 a series of innovations for the management of solid waste.
Many other laws and sectoral regulations have been issued, aiming at mitigating and adapting businesses in search of more environmentally friendly and less impactful practices. But the environmental aspect is only one of the three covered by ESG.
Inside companies, human capital is the driving force behind the health and longevity of the business. To this end, in the “S” aspect, it is necessary to aim at its internal public, promoting not only respect for labor legislation, but also the inclusion of various minority groups; the fight against prejudice and workplace harassment and the implementation of initiatives aimed at building a healthy and safe working environment.
Also in the “S”, the company turns its gaze to the surrounding community, promoting actions that can contribute to the community’s growth, supporting projects or taking part in voluntary actions.
Finally, without the company’s commitment to the general rules of Compliance and Governance (G), including fiscal and tax health, ESG practices cannot be implemented.
Often, even organically, most companies already promote ESG actions, even without communicating them to their public. This is the case, for example, with companies that have a predominance of female employees who maintain day-care centers close to their plant for their employees’ children, or have an outpatient clinic for women, contracting a gynecologist every month to see their employees, or even companies that contribute annually to social projects or incentives for professional qualification funded by the company for its employees.
All of these actions and many others can be integrated, thought through and measured so that we can start on the road to a more sustainable company within the objectives of the ESG Agenda. There is still a long way to go; standards, regulations and guidelines are being issued to help companies implement the ESG Agenda, specialized consultancies, metrics and measurement of structural and gradual actions will give robustness to the projects.
The Ronaldo Martins Law Firm has professionals specialized in the areas of Environment and Sustainability, Compliance, Labor Law and other related areas who can help you draw up an ESG Agenda, taking into account the particularities of each business.
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Further information is available from Mrs. Mariluci Miguel (firstname.lastname@example.org), tel.: (11) 99968-2692 / (11) 3066-4800.