The Challenge of Finance and Sustainability – Tech Viral Tips

At the business, industrial, governmental, institutional level and in great world organizations, we all agree that it is a duty to develop strategies to achieve sustainability. We understand sustainability as the creation of shared value for nature, man, company (creating financial value, developing management and management skills, building knowledge) and governance (including government institutions). However, the financial aspect remains a challenge, because at the same time we want the best results for nature and man, through scientific, technological and artistic progress, we must achieve the best financial results. If we do not generate monetary resources, it will not be possible for us to finance the projects we need to guarantee the sustainable future of humanity.

Businesses are institutions created to meet human needs. Shared value is the right way to think about value creation, so it is essential to measure the benefits for the company and also for the community from the company’s activities.

Maximizing the financial value of a stock (a short-term measure) is no longer the only metric to guarantee permanent wealth (a long-term measure) and now large investors and institutions, mostly financial ones, are forcing companies to go public. and the environmental cost, but also its contribution to these areas. Otherwise, companies will be left behind in their chances of obtaining financial resources to finance projects.

Finance can play a major role in allocating investment and credit resources to sustainable companies and projects that accelerate the transition to a low-carbon economy and a circular economy. Of this we already have some examples of large institutional investors such as BlackRock and Vanguard, companies that are committed to selecting sustainable projects to invest the financial resources they manage and thus the United Nations through sustainable development. Contribute to the achievement of the organization’s 2030 Agenda. Target. Large stock exchanges such as the New York and Mexican Stock Exchanges take over the task of publishing indexes of permanent companies. Bloomberg commits to deploying ESG indicators (Environment, Social and Governance) for its acronym in English) where they compare each company by its industry. Other companies and institutions have also taken on the task of publishing sustainability indicators, such as the Socially Responsible Company (ESR) seal or the Best Places to Work Seal promoted in our country.

The sustainable value creation model must consider all environmental costs, social degradation, including costs associated with restoring the environment, retaining employees, rebuilding the community, etc. Evaluation of companies that adopt the creation of sustainable value should be able to at the same time increase brand value, increase consumer loyalty, improve the attractiveness of talented associates and clearly identify deficiencies. Costs due to sustainability, such as reduced energy, water use, reduced employee health costs, reduced compliance costs and other labor costs.

It is a matter of short time in which permanent value becomes a standard of operation in the world and, therefore, it should be in Mexico. Fortunately, it is also only a matter of time before we will see the efforts of companies with sustainability strategies pay off by reducing their cost of capital.

Rocío Gómez Tagle Rangel is Professor in the Department of Accounting, Economics and Finance at UDEM. For 30 years he has collaborated in institutions of higher education and in the last two years at the University of Monterey. He is an expert in Corporate Finance and Management Systems.