In recent years, companies have faced major disruptions driven by technology and digitization that, together with the even greater impact of extreme events, have led to a radical transformation in their corporate structures and business models. For the latter, the pandemic has presented a big challenge. In an uncertain environment, companies are embracing sustainability as the vehicle for a fairer, more balanced, and ultimately more sustainable world, in response to the demands of their stakeholders.
The business world’s commitment to sustainability is real. This was one of the subjects addressed at the panel discussion moderated by Elena Sanz, General Manager of MAPFRE’s Corporate Area of People and Organization, as part of the XXVIII International Seminar of MAPFRE GLOBAL RISKS. The debate was attended by Lourdes Nieves Ripoll de Oleza, Corporate Responsibility Vice-President of Meliá Hotels International, and Carlos Ruiz Alonso, Director of Sustainability and Risk at Enagás. All confirmed their companies’ commitment to sustainability in their respective business sectors: insurance, tourism and energy.
Growing interest
The integration of ESG principles (Environmental, Social and Good Governance) into business models has been on the rise. In Elena Sanz’s view, “the pandemic we have experienced has changed a lot the way society perceives its needs and has encouraged the belief that all of us have to pursue a more fair, balanced and sustainable society.” Hence the growing interest in sustainability, both within the financial community, as well as the company, society and with the regulators.
As revealing data, in Spain, according to SPAINSIF, sustainable investments outperformed traditional investments in 2021 (with 54%, compared to 46%). The principles of responsible investment of the United Nations already had 5,000 signatories in December 2021 with a quarter of insurance companies already applying the principles for sustainability in insurance. Furthermore, Elena added, “the proxy board members who accompany us at all our meetings are increasingly promoting ESG criteria in the remuneration of our directors.”
“Insurance is a sector that has always been very committed to sustainability, carrying it in its veins, supporting economic and social development across all countries”
Pure strategy
The bet on this concept, however, is nothing new. Since 2008, Grupo Meliá has integrated sustainability into its strategic plan, an element that has gained emphasis within the company over time. The goal, according to Lourdes Nieves Ripoll, “is for sustainability to be an intrinsic part of each of the company’s organizational areas and for it to permeate all business units, wherever we may be. It’s a long, long-haul journey, but an exciting one.”
For Carlos Ruiz, Enagás’ commitment to sustainability is also not recent. In 2008, they made the decision to introduce the structured and proactive management of sustainability and today it is a core pillar in every strategic plan that helps create value for the company. In addition, “most importantly, we have made it possible for all employees in their day-to-day lives to be able to take into account other aspects, not just financial ones, which can have an influence the company’s income statement, such as social, environmental and good corporate governance factors, which are going to become very relevant.”
MAPFRE’s commitment to sustainability is also long-standing, with the social aspect being a priority. Elena Sanz highlighted the effort being made by insurers to put sustainable products on the market, due to the energy transition and investment being increasingly subject to ESG criteria. And she points out: “Insurance is a sector that has always been very committed to sustainability, carrying it in its veins, supporting economic and social development across all countries.”
“Today, regulation imposes immense amounts of information that is difficult for customers, society and even investors to assimilate”
Applying focus
Both the corporate structure and the business sector can set out the sustainability roadmap for each company. Enagás, as a company listed on IBEX 35, is very attentive to the opinions and expectations of investors. In addition, as an energy specialist, they have focused on decarbonization and the energy transition, and are developing major projects in the field of bioethanol and green hydrogen, while maintaining aspects of social and good governance.
As a family business, Grupo Meliá tries to balance the three legs of sustainability: environmental, social and good governance principles. One of its big challenges is making its hotel facilities more sustainable. That’s why they’ve been working on the energy and water efficiency of their establishments for a long time, as well as respect for biodiversity.
Elena Sanz, for her part, highlighted the need to strive so that the most vulnerable groups can gain access to Insurance, one more example of the social work going on in this sector. Other challenges include promoting financial education and increased risk awareness, especially the threats of catastrophic events, as well as accompanying companies in their transition to more sustainable models.
Complexity of regulation
The demand for regulation centered around sustainability was another topic on which the debate focused. Everyone highlighted the complexity of incorporating an increasingly comprehensive set of regulations at different levels – European, national and local – and emphasized the need for a global regulatory environment.
For Elena Sanz, there is no doubt that transparency is very important, however she also points out: “Today, regulation imposes immense amounts of information that is difficult for customers, society and even investors to assimilate. And this sometimes becomes a very complex cog in the machinery.” Lourdes Nieves Ripoll advocated for “a deeper understanding of this aspect so as to be able to implement it in an organized and planned manner, not only in the business model, but also so that it can be transferred to all business units.”
But, far from being a process of concentration or decrease n in standards, new regulations in this area appear in the landscape and, according to Carlos Ruiz, “we have to be prepared to be able to analyze them in detail and be able to digest them and translate them into what the commitments of each of our business units should be, and including our areas of sustainability.”
“The crises we’ve been facing —and still continue to face—have shown us that we have to have more resilient value chains”
Suppliers – great allies
An example of what is to come is the future directive on the due diligence by companies in the field of sustainability, which highlights the concept of a broad-based value chain. In this area, the speakers claimed that suppliers will become true partners and allies, a path they are already following at companies such as Enagás. Carlos Ruiz argued the case for achieving greater engagement: “Employee commitment is currently the subject of discussion and the next step will be commitment by suppliers. We must also help them in a cycle of continual improvement. The crises we’ve been facing —and still continue to face—have shown us that we have to have more resilient value chains.”
Grupo Meliá is also making steady strides along this path in order to achieve true traveling companions in the supply chain. “With the COVID-19 outbreak, we have learned that having allies with greater commitment solves the problems. What we have to do is see how we can move forward with everyone’s help towards a common goal,” said Lourdes Nieves Ripoll, and made a plea to help suppliers with innovation. “I strongly believe the best opportunity lies in partnering and working together.”
Ultimately, for Elena Sanz, its incorporation into the value chain is very important, “because in the end, in many cases, they provide the first impression that our customers have of us and we have to help them with this change, because if we don’t do it together, it will be much more complicated.”
“One has to clearly identify in each sector who is going to set the pace and then follow it”
The future of sustainability
As for its evolution, it has become clear that sustainability will continue to gain ground in the future, primarily due to the impact of adverse weather situations and economic uncertainty.
For Lourdes Nieves Ripoll, even though it is not yet 100% proven, customers are starting to choose sustainable and responsible companies. But in reality, we still have a long way to go: to place more emphasis on the data, that is to say, not only to exploit it from a non-financial point of view, but also as a contribution in terms of value to the business, of value to society. Today’s technology still does not allow this to be done in a simple manner and it needs to be developed in this regard and that is my goal.”
Environmental aspects and the impact of adverse weather situations are, in the opinion of Carlos Ruiz, the most significant risk over all the time horizons envisaged. “This, coupled with the rise of crises and the risk to social cohesion, make sustainability very relevant today and it will be much more so in the future.” Also, in his view, “it will be the expectations of all stakeholders that will shape the development of the markets. Sometimes it will be investors, other times, regulators, suppliers and supply chains. One has to clearly identify in each sector who is going to set the pace and then follow it.” Lastly, the Enagás’ representative came up with an optimistic idea. “We are probably in a very complex situation of uncertainty, but we are also living through a time of greater social awareness that we can only resolve with global governance, that is to say, with the support of governments, investors, employees and citizens. Together we have to try to look after this planet so that new generations can enjoy it too, at the very least leaving it in the same condition we are enjoying at the moment,” he concluded.
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