The ESG criteria (environment, social and governance) have gained global prominence as a set of guidelines for sustainable and socially responsible corporate practices. Despite its undeniable importance in promoting a more sustainable future, the debate is growing on how these criteria can be used as a justification for protectionist measures by countries or economic blocs
ESG emerged as a set of standards aimed at assessing business operations from a sustainable and ethical perspective. Companies that adopt ESG practices commit to minimizing environmental impacts, promote social equality and maintain transparent governance. These criteria have been widely adopted by investors, governments and financial institutions as a parameter for assessing long-term risks and performance
However, as ESG standards become established, concerns arise about its unequal application among countries, especially between developed and emerging economies. The lack of uniformity in criteria can create disguised trade barriers, generating a competitive disadvantage for companies in countries with greater capacity to adapt to ESG requirements
To get an idea, a report from the World Trade Organization (WTO), revealed an increase in the growth of protectionist measures by the countries that make up the G20. This year, the value of trade covered by import restrictions in force was estimated at approximately US$ 2 trillion, representing 9,4% of world imports. Furthermore, the restrictions covered an estimated amount of US$ 230 in one year,8 billion in goods exports, what does 0 represent,9% of exports in the world
Countries can use ESG environmental criteria to justify the imposition of trade barriers, such as tariffs and import restrictions, alleging environmental concerns. A recent example was the case of Carrefour's parent company, that raised environmental issues to prohibit the import of meat from Mercosur to its supermarkets in France. The use of the environmental criterion may have been an excuse for larger economic issues that have occurred in France, mainly regarding local farmers, that require a lot of subsidy to keep their respective businesses running. So, the question remains: is it an environmental issue or economic protectionism
Developing countries often face difficulties in meeting ESG standards imposed by more advanced economies (this does not mean that these criteria are not essential for humanity). This may limit access to global markets, if these countries do not make the necessary investments to meet the required environmental criteria. Raising the bar on ESG issues is very important and developing countries must take this seriously
Meanwhile, the use of environmental criteria as an excuse for not marketing occurs as an economic and political tool to safeguard local production, mainly, when it cannot support itself alone, but it depends on high subsidies to survive. What demonstrates the existence of an artificial and unhealthy environment of economic niches in developed countries. Moreover, if ESG criteria are perceived as tools of protectionism, your legitimacy can be questioned. This may further discourage the adoption of sustainable practices in the long term
To avoid the misuse of ESG as a protectionist tool, it is crucial to develop harmonized global standards. Institutions such as the World Trade Organization and the International Integrated Reporting Council, can play a central role in creating universal criteria that take into account the economic realities of different countries
Although ESG criteria represent a significant advance in the pursuit of more sustainable and responsible development or better, the very survival of the planet, its instrumentalization as a protectionist tool poses risks to global trade and to the credibility of ESG practices. By addressing these challenges through harmonized global standards and promoting international dialogues, it is possible to mitigate negative impacts and ensure that ESG continues to be a positive force for the future of the planet
