Corporate Governance is understood as the set of rules, principles, policies, and procedures that regulate and define the structure and operation of a company's governing bodies. It establishes and regulates the relationships between shareholders, the board of directors, the management team, and stakeholders, regulating the decision-making process for long-term value generation.
ESG practices have taken a predominant role in the business world and have become a requirement for companies. More and more investors are looking to allocate their money in organizations that are aligned with good practices in the environmental, social and corporate governance fields. With this new trend, avoiding simulating compliance with ESG criteria is one of the major challenges facing the market. This practice, known as greenwashing, is the attempt by an organization to make its products or services, and itself, appear sustainable when in fact they are not.
Social concern for sustainable economic development has led investors to require more ESG information to determine where their interests will be best protected. The regulations, for their part, have not been left behind and have adapted to this new panorama. It is in this context that the Chilean Financial Market Commission (CMF) published the General Standard 461, which incorporates sustainability and corporate governance issues in the organizations' Annual Report.
In the international debate on future economic progress, the concept of sustainable development has become a central element. Our lifestyles and ways of doing business have changed rapidly. In these developments, and in the definition of new development models, the environmental component has become increasingly important.
Non-financial aspects are becoming increasingly relevant in business decisions and therefore it has become essential to incorporate these elements as management variables. Today it is necessary to generate specific metrics, which together with the traditional variables empower decision making. This is where ESG (Environmental, Social, Governance) information has become a valuable element for business.
In June, an important update was announced to the core of the Global Reporting Initiative (GRI) report that will affect every organization using the GRI Standard. This update will help them report more efficiently their most significant impacts on the economy, environment, and social areas.