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How can ESG help you become and do better business?
Being successful in business is more than just about identifying and managing risk; it’s about the value a business creates. The definition of value in this sense is not simply how good your product or service is for your customer; instead, we mean how valuable your whole process is when bringing your product or service to market.
We’re talking suppliers, working practices, design procedures, retailers and financial investments to name but a few. Over the last few years, there is growing evidence that shows in order to do well, a business has to do good – which is why sustainable practices and Environmental Social Governance (ESG) management can be viewed as far more beneficial to a company’s standing than simply managing risk to the business itself.
What is ESG?
Every business is connected in some way to ESG concerns, but what are they?
- Environmental – every company uses energy and resources meaning every company is both directly affected by the environment and affects the environment directly through consumption, waste and emissions.
- Social – every business needs to build relationships in order to trade. Social aspects include your suppliers and retailers, working practices for employees as well as diversity and inclusion.
- Governance – every business has an internal set of practices and procedures it uses to govern itself. It will have people in set positions who make decisions to comply with rules and regulations set both internally and externally to ensure stakeholders’ needs are met.
For a company to be successful then, it needs to be seen as good and doing the right thing, particularly now that consumers are demanding high standards of sustainability and quality of employment. Investors are also more likely to favour companies that implement ESG practices and goals as these companies are ones tipped for growth and longevity through the demonstration of their flexibility.
Be proactive, not reactive
At its core, risk management looks at the threat to an organisation’s capital and earnings such as financial uncertainty, strategic management errors and accidents. However, setting an ESG framework might reduce the likelihood of some of those risks altogether. Therefore, here are a few ESG goals that you could set yourself that are going to create value and reduce potential risks to your business:
Energy & Utilities
- Consider how your energy is generated and the level of control within your organisation. Establish a data baseline and KPIs that are representative for your industry. eg miles driven, productivity, head count per KWh. A lot of businesses use Christmas Day to baseline their lowest energy usage and challenge themselves to improve on that.
- Are you monitoring on cost or usage? Energy spend fluctuates, but (KWh) is your actual usage.
- Check water use regularly. Many unseen underground leaks have been detected before costly structural damage can occur.
- Consider flexible home working options supported by hot desking and hybrid work patterns. Smaller office space, less parking requirements and greater flexibility for your staff and your business.
- In a lot of areas public transport is improving. Reduce pressure on your parking availability by promoting and publishing up to date timetables and routes into work. Set up a car share. Just ask Peter Kay how popular this can be!
- Route planning and tracking of vehicles gives you actual usage figures to help calculate carbon usage to establish and challenge KPIs.
- Maintain checks on air conditioning and consider fire and flood prevention.
- Check that you or your subcontractors that handle or store wastes or who conduct services that require them to remove items are following the required waste legislation. For example if a carpenter replaces your windows and takes the old frames away, then they will need a Waste Carriers Licence. You are responsible for your wastes until point of disposal, even if you are not handling those wastes yourself. This is your Duty of Care. Check www.gov.uk for more information.
- Include holistic appraisals of projects incorporated CO2 modelling
- Consider CO2 offsetting actions
- Look for low carbon options where possible. Consider supply chain distances too as these affect the carbon footprint of your goods and services.
- Review your processes to eliminate wastes and identify where you can reuse items.
- Where possible, remove, reduce, reuse, recycle and recover in order of preference.
- Use local, Fairtrade or sustainably sourced products containing recycled content or support local suppliers
- Ensure fair and working practices are implemented throughout your supply chain and even your supply chain’s supply chain.
- Know what you are buying and its provenance. Your customers want to know this. If you are sourcing locally and sustainably, then tell them about it.
- Include flexible payment terms for smaller contractors. 60 or 90 days end of month could be a deal breaker for many, and may leave you in the lurch.
- Increase enthusiasm of the staff in general for embracing charitable and volunteering opportunities
- Create a symbiotic relationship between current KPI performance and keep them informed. Explain where you are heading and regularly report on the progress. Remember to celebrate your wins!
Community & Biodiversity
- Sponsor community events or local charities
- Provide work experience opportunities. There are funded placements available for 16-24 year olds through the Kickstart scheme.
- Manage green areas to encourage biodiversity of species by mowing less or sowing wildflower seeds.
- Put up bird boxes and feeding stations.
When integrated into an organisation’s DNA, sustainability and ESG management becomes the glue behind the power and cohesiveness of a modern and resilient business. More importantly, doing good can really be the catalyst to doing well.
As an interactive, online platform, YouTree tailors its courses and workshops to ensure businesses implement sustainable, ESG strategies. We provides packages to help staff understand where ESG fits into the larger risk management portfolio.
YouTree can helps businesses of all shapes and sizes change the mindset of their staff and help them feel connected as part of something bigger, where they can make a visible difference.
For more about my professional and personal coaching packages, get in touch today and book your no obligation, 15-minute coffee and connect session!
This article was written by: YouTree