Creating a Sustainable World:
The Brazilian Perspective
Brazilian leaders share their views on advancing their sustainability agendas
Through a global lens, Brazil cannot be dissociated from sustainability. Home to the Amazon Rainforest and to nearly 215 million people, the nation also houses several of the world’s largest companies across many sectors. These organizations play a critical role in producing goods, driving innovation, and promoting prosperity and growth while tackling environmental, social, and governance (ESG) issues. Over the years, we’ve seen many of them embark on or advance their sustainability agendas, inspiring their teams, customers, and peers in creating a sustainable world through purposeful leadership.
But much of the hard work is just beginning—in Brazil and elsewhere. An Egon Zehnder survey with 329 leaders across 53 countries, titled “Creating a Sustainable World: Are leaders doing enough?,” found that while there are pockets of companies around the world that are making progress, we have yet to hit a tipping point to spur large-scale change. The findings focus on how top leadership will inspire this agenda, how culture must shift, the challenge of metrics, and the critical need to hire a Chief Sustainability Officer.
To shed light on how Brazilian leaders are approaching their sustainability agenda and what challenges they face when compared to the global landscape, we sat down with leaders in health, financial services, and industrial companies. This article highlights the global survey’s findings and Brazilian leaders’ perspectives on them.
Read on for the key takeaways:
CEOs own the sustainability agenda and must empower their teams to deliver on it
Globally, most respondents (68%) say a single person owns the sustainability agenda in their companies; 66 percent of them say it’s the CEO (44 percent among Brazilian respondents), 9 percent say it’s the Chief Sustainability Officer. This finding also highlights that while leaders own and convey their personal and business purpose, responsibilities should be shared across teams.
Brazilian leaders understand this agenda should be as relevant to the business as things such as market share or launching a new business line. But they also recognize the need to overcome several barriers to spur much-needed progress.
“The biggest risk for the sustainability agenda is top executive leadership having little board exposure,” says Rosane Santos, ESG head of BAMIN. “It needs to be an evolutionary process. CEOs need to be more visible in forums on the sustainability subject besides being practical in their actions,” she adds.
Beyond visibility, broadening the lens on sustainability is critical. As Fernando Modé, CEO of O Boticário, puts it: “The main barrier for the development of the agenda is the executives' lack of knowledge and consequently a superficial performance. For example, focusing sustainability purely as recycling; focusing on diversity only as gender. The performances have to be broader and more structural.”
At the board level, the global survey uncovers that 82% of leaders believe boards are well-equipped to monitor sustainability threats and opportunities, yet almost two out of 10 believe board members lack relevant skills. This concern also exists in Brazil. “I started out on the board feeling alone on the ESG agenda, but over the course of this year the reality has changed,” notes Cristiana Pipponzi, board member of RaiaDrogasil (RD), adding the relevance of intentionality. “Not only the composition of the board, but the evolution of the board members themselves has brought a marked repertoire awareness regarding the ESG agenda.”
To be a more sustainable company, current culture and purpose may need to shift
Globally, more than half (56%) of our survey respondents say their organizations need to change their collective mindsets to achieve their sustainability goals. This is true for 33 percent of Brazilian respondents.
For example, to move the needle on sustainability, Brazilian leaders have found ways to link it to the compensation package. “There are 35 general [sustainability] goals, of which we prioritized eight for 2022. Every three months we check the indicators of energy efficiency, internal health, increase in the portfolio of healthy products, etc. We are now creating a sustainability index for the stores and we will start to disclose it to the market,” explains Pipponzi of RD, which has embedded this structure within every employee’s compensation package.
At Natura &Co, a company highly regarded for its sustainability focus, everyone is accountable for and has sustainability metrics linked to remuneration. “For instance, a product manager has a calculator to measure the environmental footprint before making a development and market launch. If it is not in a good index, the product doesn’t go ahead,” CEO João Paulo Ferreira explains. “It is already something rooted inside the organization.”
Internal culture matters, too. Having an employee base that is highly engaged is a major asset. “Four to five thousand people inside Nubank are interested in acting on sustainability fronts. It was a pleasant surprise when I arrived. The company itself already has a high intention of positive impact, a profile of non-conformist employees and a lot of diversity,” says Christianne Canavero, an ESG Executive with solid experience in several industry segments, former Head of ESG at Nubank, mentioning that an important trait to advance this agenda is having humility. “No one has the first or last word; ESG is an action front with no finish line.”
Lack of universal metrics is an ongoing challenge for most companies
Measuring progress is challenging even for companies that have already embedded ESG into their core.
The global survey shows that 86 percent of companies have signed up to ESG targets (92 percent among Brazilian respondents), and those that have not said they are in the process of doing so—which signals a strong level of commitment to make sustainability a priority.
“The concept of sustainability itself is very ethereal, it means different things to different people and companies. This is the first challenge in measuring actions on the subject,” says Jorge Soto, Head of Sustainable Development of Braskem.
Regardless of how it is defined or what metrics are used, sustainability shouldn’t be measured solely for reporting purposes, but rather to demonstrate impact because it is becoming increasingly important for customers and stakeholders. “Many organizations are finally understanding that ESG is more than best practices implementation, but also a valuable theme for investors, and overall society,” says Santos of BAMIN.
On the other hand, too much focus on generating immediate investor value could be insidious because the sustainability agenda should be a long game. “I see as a great risk today the performance in sustainability focused on maximizing value for the shareholder, and with this the desire to satisfy the short-term need instead of the long-term. Looking at the glass as half full, shareholders' demands on the subject have brought a greater sense of urgency to the companies,” says Ferreira of Natura &Co.
Ultimately, adjusting the governance around sustainability should be the starting point for organizations to make real progress. Canavero adds, “As well as governance, having ESG metrics added to the Company’s dashboard is fundamental to the success of the agenda. With this alignment and transparency, all teams will have visibility of what are the main gaps to be closed and establish roadmaps to tackle them.”
A CSO leading the sustainability charge should be a baseline, not a “nice to have.”
While most survey respondents believe CEOs “own” the sustainability agenda, 60 percent say CSOs are responsible for leading it. CSOs are often the missing link for organizations when trying to tackle the major challenge of connecting business and sustainability goals.
Several companies share the vision that sustainability and business are deeply intertwined. “This turned out to be Natura's silver lining. Sustainability is the way Natura does business; sustainability is the business itself. Our goal is to transform socio-environmental challenges into business opportunities,” notes Ferreira of Natura &Co.
Precisely because of this correlation, companies must be willing to make tradeoffs, even if it means financial losses in the short term. For Modé of O Boticário, “It is fundamental to be clear that the fact that you are aligned with your purpose can cause loss of business. For example, China required animal testing for commercializing products in their country. We have not tested products on animals for years, and we decided we wouldn’t do it, and so we ended up losing the Chinese market.”
Finally, having the right sustainability leader in place is key to accelerate the agenda. The right CSO profile depends on the organization’s ambitions and level of maturity regarding the sustainability agenda – some have just started their journey while others are already perceived as setting the standard for best practices in Brazil. There is no one-size-fits-all approach, but our findings do point to a few competencies that we believe are core for any successful CSO executive: technical knowledge; influencing skills (ability to navigate and engage across levels and areas); strategic mindset (understanding that technical must connect with business); combination of curiosity and insight (we don’t have all the answers or right solutions to the environment crisis we face).
Our takeaway is, when seeking a CSO, be open to new/unorthodox ideas – the right candidate can come from any background – e.g., internal controls.
Finding Human Answers to Complex Sustainability Challenges
Our global study offers a hopeful outlook on how business leaders are advancing their sustainability agendas. The Brazil perspective highlights that leaders are headed in the same direction. They are committed to becoming more knowledgeable, equipping the board of directors, inspiring employees to engage with the topic, finding the right talent, and enhancing their measuring systems to not only comply with regulations and pressure from stakeholders—but to demonstrate real impact.
The Brazilian leaders who shared their insights with us know that sustainability is a continuous journey. On one hand, even the companies that are best regarded for their sustainability focus are refining their sustainability strategy and are on a learning trajectory as they advance. On the other, some leaders whose companies aren’t as mature on this front are working full speed to develop mechanisms to act. Regardless of where leaders are on this journey, no one has all the answers for how to overcome challenges that arise along the way.
What makes this work so rewarding is that leaders are instilling a strong sense of purpose to spark action throughout the organizations they lead. Because they know that when this sentiment becomes widespread among people, then we will start seeing scalable change.
As our global report states, creating a sustainable world starts with finding human answers to complex challenges. Awareness of sustainability has never been greater, and global events, such as COP27 and the World Economic Forum, have placed an even sharper focus on the need for countries to take a “giant leap” on their climate ambition. Business leaders from every corner of the globe, including Brazil, are leading the change by investing their time and resources, asking questions, and designing the solutions the world so urgently needs.