The growing importance of Environmental, Social, and Governance (ESG) in the post-COVID-19 era

Covid-19 has laid on the table the fact that we can all add up and that, today more than ever, there is a need to aim towards what we call “stakeholder capitalism”

Reading time: 3 min
Laura Cabo Díez

Laura Cabo Díez

Community Manager and Editor, Telefónica S. A.

Covid-19 has laid on the table the fact that we can all add up and that, today more than ever, there is a need to aim towards what we call “stakeholder capitalism”. In short, an inclusive capitalism for stakeholders which is to everyone’s benefit. The system needs to evolve to incorporate environmental and social capital when it comes to making decisions.

Transparency is fundamental in this process (without it there is no trust), with the corporate annual reports being a great bulwark. To discuss its importance and the application of the new Law 11/2018 that now extends the obligation of companies with more than 250 employees to provide non-financial information; Sust4in organised an online conference with the presence of experts such as Andy Beanland, the Director of the WBCSD (World Business Council for Sustainable Development).

Governance and environmental issues have, until now, been the most relevant ones; but since the outbreak of the Covid-19 pandemic, social issues are on the rise

Beanland provided a global perspective on the world of corporate reporting, pointing out that effective, transparent and reliable reporting will be essential to a transition to a more sustainable world. This is no longer an option for us, but a necessity. Some keys to move forward successfully:

Pay attention to your social impact: it is very important to identify what investors are concerned about. Gema Esteban, Director of Investments and ESG Analysts at Telefónica, pointed out that until last year it had been the environmental and corporate governance areas that were of most interest to us. “Currently, after Covid-19, the social impact has taken on huge importance. Not only from the point of view of social bonds, which have increased, but also on issues such as the impact on employees, how you manage your capital, etc. These issues are beginning to be a requirement that is here to stay”, she stated.

There is an urgency to ensure standardisation, to define homogeneous metrics for aspects such as the salary gap

Give us standards now, please: the experts agreed on the urgency of standards and the importance of going deeper into the issues. The entry of this law into force in Spain makes our country a perfect place to test the changes and improvements. However, with this comes a trend towards widening the scope and standardisation. We’re just at the beginning of a long road ahead. The need for regulations that homogenise data processing is key to developing the management and reporting process.

Integrated reports for an in-depth report: Gema Esteban pointed out that at Telefónica, non-financial information is now at the same level as financial information. “This year we have been more prepared and have aimed to go deeper into both the scope and the issues”, something that is evident in the company’s latest Integrated Management Report. In this regard, and although it may surprise us, there aren’t that many companies which report through an integrated report combining financial and non-financial information together. Currently only 39% of companies are carry out this exercise, compared to 26% which were doing so in 2015.

The SDGs as a common goal: the UN Sustainable Development Goals have also become a tool for integrated and sustainability reports. 95% of reports take these goals into account in order to align their contribution to the needs of humanity.

Law 11/2018 reflects the fact that “non-financial” information is becoming increasingly important for regulators, investors and society in general  

Although we are only at the beginning of the road, the interest shown by companies, investors and society itself makes it clear that non-financial information, despite current limitations, is becoming increasingly relevant. So much so, that despite the lack of standards or regulatory unanimity, companies are providing better and better information and, just as importantly, investors are basing their investment criteria on ESG aspects.


Contact our communication department or requests additional material.

Telefónica Centenary logo Celebrate with us the Telefónica Centenary