This week, La República, one of Colombia’s most important economic and financial newspapers, published the latest article by ATREVIA’s president, Núria Vilanova, entitled “ESG: Responsible Investing, On the Rise”. Last week the book ‘Consejos para Consejos’ was presented, in which 14 co-authors offer their experience at the disposal of top company leaders. Núria Vilanova’s contribution to this collective work consists of the ‘Reputation and Collaborative Governance’ chapter, where she explains that the key is to do what is said, say what is done, and prove it. This certainty comes from advising companies on how to improve their communication and strategic positioning for over three decades in 15 different countries.
“Despite diving deeper into this idea in coming weeks, today I would like to focus on a practical case that confirms my reasoning: today, reputation and a real commitment to ESG (Environmental, Social, and Governance) inspired business management go so hand in hand to the point of directly affecting company value and its attractiveness to investors.
In fact, they have become decisive factors in a major business transaction that, a few years ago, would have only served financial and economic motives. This fulfills Blackrock CEO Larry Fink´s predictions that I have previously referred to. Several months ago, he predicted that climate change would lead to a “significant reallocation of capital” sooner than expected and also set reputation trends.
The facts prove him right. Ecopetrol’s takeover bid over the 51.4% of Interconexión Eléctrica S.A. (ISA) is a perfect example.
This transaction will allow the former to stabilize its income flow by reducing its dependence on raw material market prices. It will also bring about other benefits associated with the ESG criteria: the ability to correct its environmental balances, the acceleration of the decarbonization process, the promotion of gas usage, and the facilitation of its commitment to green hydrogen as an energy source. Likewise, it will also enhance its reputation since ISA is a reliable, efficient, and profitable company that bases its strategic path on sustainability and good governance. The result will be the leading energy conglomerate in the region and one of the largest in the world.
With this, Ecopetrol climbs several points in the ESG ranking and accurately meets Larry’s predictions. This is the answer to the question raised by many: Is being environmentally conscious a trend for rich countries? Can Ibero-America do the same? My answer is that it can, and it should because it can create value. Thanks to this decision, I am confident that this company will receive positive recognition reflected in the stock market. Furthermore, we will see additional Colombian companies establishing themselves as leaders in this field.
You might be wondering what this has to do with communication and reputation. Well, quite a lot. It is important to be aware of the risks that come with not following a coherent narrative. If these types of actions only prove to be false environmental commitments-greenwashing-they will end up causing adverse and costly repercussions, directly impacting the income statement and share price.
In conclusion, it is essential to position oneself as a company that embraces ESG principles, one that promotes them through its corporate strategy and communicates them to society through its projects and initiatives. There is no time to waste since all agree that companies that do not act in accordance with environmental, social, and governance standards will suffer from investor flight and market punishment.”