ESG (Environmental, Social, and Governance) Practices Represent Growth Opportunities

Sustainability is increasingly present across all areas of society today. Growing awareness of this topic has created the need to understand, incorporate, and adapt business models to explicitly include this purpose.

In 1987, the United Nations Brundtland Commission defined sustainability as meeting “the needs of the present without compromising the ability of future generations to meet their own needs.”

Based on this concept, legislation has been developed, such as the European Union Taxonomy for economic activities considered environmentally sustainable, as well as approaches to ESG – Environmental, Social, and Governance – within the corporate context.

The relevance of a company’s environmental impact is now widely recognized, for example in assessing carbon dioxide emissions and the measures adopted to achieve carbon neutrality.

In recent years, it has also been acknowledged that the entire value chain is influenced by the growing focus on sustainability, including environmental (E) and social (S) factors. However, for companies to implement actions with real impact, a strong commitment from corporate governance (G) is essential.

The implementation of environmental policies, such as the use of renewable energy or waste management, and social policies, both internal (talent management, diversity) and external (relationships with clients and suppliers), will only be sustainable and impactful if corporate governance is aligned and focused on execution and oversight.

Companies can and should consider ESG factors not only as a tool to assess potential risks but also to explore growth opportunities arising from global trends, such as increasing digitalization and the circular economy.

ActiveCap, as a private equity fund management company focused on investing in Portuguese companies, incorporates the creation of value and sustainable economic growth as key criteria for selecting investments, both for portfolio companies and for the national economy as a whole.

Including ESG criteria in the development of portfolio companies’ business plans has become an integral part of their processes and a differentiating factor in their future positioning.

This approach aims to ensure the sustainability of the business model today and in the future, improve continuity plans, mitigate risks, and explore opportunities resulting from the implementation of ESG strategies.

The criteria analyzed and practices developed result from the combination of the company’s specific characteristics, its market positioning, future outlook, and the maturity level of each company regarding ESG.

Our investment methodology, which includes executive representation on the Boards of the companies in which we invest, positions ActiveCap strategically to implement ESG policies—both in designing them with a focus on E and S, and in strengthening Governance to ensure their execution.

However, these policies are not static. To achieve their objectives, ESG strategies require ongoing monitoring and adaptation in line with the evolution of the company and the market in which it operates.