American ESG Group
Apr 18, 2022
Here is money. This is like the scholarship you passed up in college simply because you didn't know it existed.
What is the company made of? Of people. Except for a remote possibility, there are people working there.
If the employees complain because they are not given what they deserve and if the company affects more than helps the people of the 'neighborhood' or the city, it is a matter of time before they lose customers, more problems or lawsuits arrive, if not they are already there.
What started as a nice wish for social responsibility in the 90s, evolved at the speed of the heat of climate change. With environmental concern came social concern and even attention to the company itself, to corporate governance, so that jobs last and create opportunities.
When saying it arrived, it is because the UN has been working on it for a long time and the SEC, the highest US regulatory authority in the financial field, is already preparing emissions accounting standards that also apply to exporters from Ciudad Juárez or Monterrey.
Compliance with ESG criteria (Environment, Social, and corporate Governance) is already on the largest companies in the world and quickly spills over to their suppliers. Even on those who perhaps only make a hinge or a plastic injection part.
If they are suppliers, they are part or complicit in what their client does.
But compliance is a cost, right? It sounds good to take care of the environment and the employees, but putting solar panels or giving benefits and increasing benefits, costs.
Knowing this circumstance, the largest companies themselves –sometimes forced by the government of their countries of origin– already “lubricate” the adjustments. This is where the money is, there is credit.
Take Germany's Siemens as an example. Last month it reported in the United States that it had launched a program to provide $100 million in loans to small and medium-sized businesses seeking to reduce their carbon emissions.
They do so knowing that they represent a large part of the national supply chains.
The projects that fall within the scope of this initiative include solar panels, redesign of a factory floor or implementation of technology to track emissions, with loans ranging between one million and about 10 million dollars, for a term of three years. .
Siemens joins the efforts of institutions such as the Kreditanstalt für Wiederaufbau (KfW); the European Investment Bank (EIB) and the Japan Bank for International Cooperation (JBIC).
They all also offer loans in ranges similar to those granted by Siemens, in some cases with restrictions such as a limit of 50 percent of the total amount of the project. Amen of course, of rules to be met, such as a minimum of five years including at least one year of grace and a maximum of up to 15 years, with fixed or variable interest rates, annual or semi-annual payment options.
It is surprising how businessmen of all levels continue to perceive compliance with standards of care for the environment and society in their operations as a distant matter.
It would suffice to see that the three main rating agencies in the world: Fitch, Moody's and S&P already operate directly or in parallel with offices and methodologies that measure compliance with ESG criteria.
What is coming will also apply to local, state or federal governments that are also part of the economic scheme.
Even in Mexico, the small rating agency HR Ratings has already established measures for these actors, in an effort to register their levels of honor of obligations. Is the government of 'Oaxaca' a good employer? How do you take care of your waste? Do you charge but do not comply?
All of this is measured to find out if a company or a government helps or hinders the need to take care of the system in which we all operate. Many will be left on the sidelines, without clients… and without access to the financial system. There is light, still.
