In our March 2023 Newsletter, we touched on the topic of ESG (Environmental Social Governance) and why it is gaining in importance. We also highlighted the significance of having employees, clients, investors, and other stakeholders involved in defining and developing a plan.
Publicly traded companies, more so than private entities, will need to develop and implement ESG plans sooner rather than later. This will ultimately impact businesses across all types of industries ranging from restaurants facing pressures to adopt electric stoves to manufacturers adopting measures to reduce emissions, to healthcare facilities addressing environmental concerns. Consequently, solutions must be tailored to support requirements for each industry and the individual organization’s environmental impact.
Once you have the outline, it is important to proceed gradually and establish long-term, practical goals in-line with your commitments. For example, a large restaurant chain may commit to electric stoves for any new locations as part of its policy, which is a smaller-scale commitment when compared to replacing all existing stoves. However, considering many chefs prefer gas stoves for their precise heat control and even-cooking, and the consumer experience may also be impacted, this is an example of a change worth exploring further given the bottom-line may be negatively impacted at new locations by this change.
Where do you start if your organization is at an early stage of the process? Familiarize yourself with your industry and understand what other similar businesses have defined and implemented. Many companies highlight their ESG plans and sustainability initiatives on their websites. Begin by looking into and participating in even simple initiatives such as implementing a recycling program if your organization has not already.
From an energy perspective, consider switching to a competitive supply contract for purchasing electricity and investigate renewable options including Renewable Energy Certificates (RECs) to make your supply greener. For companies seeking to go beyond renewable credits, there are options like entering a Power Purchase Agreement (PPA) to procure clean energy or leveraging net metering credits if you own your property, and community solar options. Companies aiming to make more significant impacts with their energy initiatives might explore on-site solar or other renewable generation, and battery solutions, however, it is advisable to prioritize easier measures first.
Overall, setting realistic goals is crucial. Public companies can expect to report on or to be asked about the organization’s progress towards achieving its ESG goals during earnings calls. Many companies falter because of overly ambitious initial commitments. Achieving the simplest of goals, you demonstrate your genuine dedication to sustainability and prove that your plans are not mere window dressing.
ESG policies are important at every stage, from definition to development to implementation and reporting. If you are not sure where to start for your business, please feel free to reach out to me at email@example.com.