Business
ESG Started in Finance, Not as a Trend, Ludmila Vilar Says
The sustainability expert outlines the history of the ESG agenda and explains corporate compliance demands.
Ludmila Vilar explores the financial market origins of ESG and debunks common misconceptions about the framework. She traces its evolution from the 1970s to modern compliance mandates on stock exchanges.
Ludmila Vilar, a sustainability communications specialist, explained during a conversation with Bruno Gimenes on Marketing - The Podcast that the ESG agenda did not emerge as a passing trend driven solely by Gen Z purpose-seeking. According to Vilar, the framework originated from financial market needs and investor risk management strategies over the past few decades.
In the video above, Vilar and Bruno examine the historical evolution of the acronym and the practical accountability mechanisms governing corporate governance in Brazil and internationally.
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The financial roots and business risk mitigation
Addressing the perception that corporate sustainability is a recent demand or restricted to ideological discourse, Vilar points out that the movement has strictly economic foundations. She recalls that between the 1970s and 1990s, the debate on corporate social responsibility gained momentum as investors sought to protect capital against high-volatility, high-risk sectors such as weapons, gambling, and pornography.
"ESG is a very capitalist concept, contrary to what many people think," Vilar states. The executive emphasizes that the systematic analysis of environmental, social, and governance indicators primarily serves to gauge capital security: "ESG is a movement that starts with investors. So ESG is a movement, it is a methodology, it is—ultimately, it is intimately linked to capitalism and to profit, to managing and securing company profits, the safety of fund investments, corporate investments, and individual investments; in short, it is nothing more than a way for investors to take fewer risks."
Institutional timeline and the UN Global Compact
The consolidation of the term ESG involved key institutional milestones spanning several decades. Vilar cites the 1992 Earth Summit (Rio 92) as the turning point for environmental visibility in Brazil and details the collaboration that coined the acronym in 2004. That year, the United Nations Global Compact partnered with the World Bank to produce the report Who Cares Wins, the document that officially introduced the concept.
"In 2004, the Global Compact, which is this UN body, teamed up with the World Bank and they released a report called Who Cares Wins," she explains. Vilar notes that Brazil has the second-largest network of UN Global Compact signatory companies in the world. The timeline continued with the launch of the Principles for Responsible Investment (PRI) in 2006 and the UN's 17 Sustainable Development Goals (SDGs), established in 2015 with targets set for 2030.
Regulatory pressure on stock exchanges and the rigor of data
Although the COVID-19 pandemic in 2020 highlighted how social and environmental imbalances affect corporate operations, the recent expansion of ESG stems from regulatory and market demands. Publicly traded companies listed on the Brazilian stock exchange are now required to report socio-environmental and governance indicators, turning transparency into a financial criterion.
According to Vilar, while demand from Gen Z consumers exists, capital remains the decisive factor behind corporate accountability: "There is a pressure called money, investment. Publicly traded companies listed on the stock exchange are required today to report indicators that they weren't required to report before." She concludes by highlighting the discipline's technical nature: "So that's it, ESG is something very rational, very data-driven. Of course, it's not just data—everything needs a human perspective, but there's nothing woke about it, no hype, no fad, you know? It's a science."
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