The acronym ESG – Environmental, Social, and Governance – has gained recognition over recent years, including focus on ESG in the 2004 report 'Who Cares Wins – Connecting Financial Markets to a Changing World’. This World Bank publication in partnership with the Global Pact of the United Nations Organization and the Central Financial Institutions in the world sought to obtain answers on how to integrate the three factors into the capital markets.

In practical terms, ESG factors are practices that lead the business and investments. Its analysis can determine how the company positions itself in regard as to the planet and society in which it operates. So, more and more, the sustainability of the companies is measured through these three axes.

Financial institutions frequently use ESG factors as well as indexes to measure the performance of the companies and, as a logical consequence, this will directly affect the evaluation of such companies in the market with respect to the assets and reputation of their brands1. In addition, consumers are starting to demand responsible attitudes and transparency from companies they interact with.

These indexes will bring several advantages to the companies, such as reputational benefits, further transparency, governance, diversity of investors, and the tendency to improve the valuation of companies in the long term.

Role of intellectual property in ESG indexes

It is essential to know how the role of intellectual property in this scenario can be preponderant to ESG indexes and the role of the IP system in sustainable innovations. These questions can be answered through the intangible assets developed by the companies driven by it. Once companies begin to look at sustainable innovation, intellectual property practices should be fostered by public policymakers.

Engaging government and regulators in discussing the potential benefits of implementing a differentiated IP system is essential to strengthen the alliance between the intellectual property system and ESG, and consequently sustainable innovation.

Several initiatives can be implemented to foster this alliance. One of them is the advocacy with Patent and Trademark Offices worldwide to include the IP system on ESG policies' debates. This strategy would promote discussion of the benefits of PTOs worldwide to the entrepreneurs, companies, and inventors to protect their innovation and to make it economically sustainable and socially inclusive.

The development of innovation related to green and social technologies could be designed and implemented by advocacy initiatives with intellectual property regulator stakeholders worldwide. This communication strategy aims to foster the debate towards the implementation of patent, design, and trademark systems that would benefit these innovations, such as expediting the granting of IP rights, reducing official fees, and fostering the licensing of IP rights, among others.

Another possibility would be advocacy with financial stakeholders to fund companies and startups that develop and protect technologies related to ESG´s indexes, such as green techs, social technologies that comply with fostering genders, race, and social inclusion.

Visibly, the relationship between intellectual property and ESG practices has everything to do with sustainable innovation. IP practices provide companies, startups, and inventions with conditions to encourage them to protect their technologies and comply with ESG´s rules.  ESG is here to stay and to transform humanity and to improve relationships between people in a better, further sustainable world.

1 https://www.environmentallawandpolicy.com/2021/05/exxon-mobil-corp-board-turnover-a-cautionary-esg-tale-or-recipe-for-success/

 

Further information
The case of green patents in Brazil is only one example of many that can be used as an example by PTOs worldwide to provide inventors with benefits and encourage them to develop sustainable technologies.
FICPI could become a main advocate and enabler towards bringing IP agents to ESG’s central debates.
How FICPI makes IP attorneys more effective
FICPI’s independent IP attorney members are present in over 80 countries and regions and an essential part of their work is serving as a driver in the economic growth of their local region.  Sustainable innovations, green tech and ESG are essential facets of the future and FICPI is also taking measures to embrace this with its 'Sustainable FICPI' initiative.

 

 

 

 

 

 

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