Tips & Guides

ESG – Good for Business, Good for the Planet

Pinergy
22 October 2021

ESG is not just a trend, it is way to sustainably manage your business

ESG (Environmental, Social & Governance) reporting is a relatively new term for many businesses. Essentially, it is what is your business is doing to help the environment, society and demonstrate that the business is run in a good, ethical way – a more stakeholder centric way of doing business.

In my opinion, we are really talking about sustainability – of the environment of society and ultimately sustainability of the business

So, is it not just the new CSR?

No, some people say to me is that ESG is really the new CSR? Is it just a fad? Well no. This time it is real.  The issue with CSR was that it is was about talking a good game; don’t get me wrong – its intentions are noble but without a real obligation, particularly in the areas of sustainability, it led to things like ‘Green Washing’ – saying you were doing something but it was not changing business practices. This time it is real! We need to play the game the right way – ESG requires real decisions, measurement and needs to be addressed for very real reasons in terms of the Climate Emergency the world is facing which obviously has a direct Societal benefit also.

Every business has an ecosystem

All business and how we run our business is not done so in a vacuum. It seems to me that every business nowadays has a very dynamic ecosystem and that ecosystem will determine the impact ESG has on your business. It is becoming as straightforward as that your response to ESG can help your business or can hinder your business. That’s the difference with CSR now – it has become that important!

To demonstrate this point let’s look at the ecosystem of any typical business could be;

  • The product or service you supply
  • People
  • Suppliers
  • Investors
  • Banks & finance houses
  • And of course… Customers

In my opinion the ESG response will be led firstly by your customers. Customers are increasingly looking for the sustainable choice. They want to feel they are doing the right thing. If it wasn’t for Covid the #1 issue globally would be sustainability. Customers drive competition and will force us all as business leaders to ask the question “are we delivering the sustainable solution?”

On the back of this narrative our supply chains will become under scrutiny, So, for example can we demonstrate that our suppliers are doing things the sustainable way? And are we processing or doing our value add the sustainable way?

Small decisions matter

Every time you make a decision (big or small) it can have a bigger impact, and you need to consider the impact not only on your business but also its ecosystems These decisions need to be Transparency (not a new concept!). We are used to expressions such as “from the farm gate to the fork” in response to quality issues & regulatory standards, for example in the Food & Agri sector.

Sustainability is going the same way and I suppose from our perspective we are very focused in the energy industry on how businesses use their energy.  To be transparent and demonstrate sustainability you must be able to measure it and that includes inputs to your business, like electricity, gas, water, waste, ultimately your CO2 footprint.

The people in your business really matter in this whole discussion. Remember your people are consumers too. People will question what the decisions you make.

Jobs for life as a concept is gone and for many the move to remote working is a sustainable choice for the environment, society and a healthy work life balance. Your people will encourage you to demonstrate sustainable ways of doing business and question you as a business leader in your response to it or the decisions you take. To paraphrase an old expression – people are putting their time (or money) where their values are. So don’t underestimate your people in the ESG opportunity.

The ESG Journey is about Decision Making

As business leaders we are making decisions all the time. And Today, we can see that the decisions we make about ESG matters will impact our business performance. In our business we come across lots of businesses who are making these “little” decisions every day. Interestingly we increasingly see where ESG is interlinked into core commercial decisions.

Why? ESG makes commercial sense.

  • It attracts customers
  • It attracts investment
  • We are seeing more and more corporates creating ESG reporting functions and roles. This will begin to filter into SMEs also.
  • We are being asked to assist businesses in their ESG reporting – the measurement of CO2

And this is a key point – We are all familiar with the expression “What gets measured gets done” This is at the core of ESG. If you can see progress, you can make real progress. And if you can see progress, you can demonstrate progress. This measurement and demonstration are at the heart of attracting customers and investment because what you are doing is the right thing to do for the environment or society

At Pinergy we are meeting many forward-thinking businesses who are looking at their energy plans and policies. Long gone are the days of getting a junior in the Finance team to go out a get some prices for energy.

Our conversations today are with CEO’s and Finance Directors, and we are exploring energy partnerships as part of a business agenda which is entirely consistent with their ESG agenda.  They are not just talking a 12-month horizon but looking to be ready for the next 5 to 20 years.

Their ESG plans typically take the following format.

  1. They are looking for green energy – To enable ESG reporting and significantly lower carbon footprint
  2. They are looking to measure all their utilities – Electricity, Gas, but also water and waste and in response to Covid Air Quality too.
  3. They are looking at their vehicle fleets – Could they drive electric cars. Can we help them with EV charging? How can employees charge cars at home and bill that cost to the business?
  4. Finally, they are looking at their longer-term energy plans. Particularly in response to the current energy crisis where Minister Ryan said recently that supply could be tight for the next 3 to 4 winters. Micro generation projects like Solar can take that worry away and the volatility in current markets and provide a real asset that you can point your customers, suppliers, staff, and investors to as part of your ESG story.

These are business conversations but are ESG conversations too

This is not going away anytime soon

We are going to see a greater light shined on this topic in the coming weeks. There is a COP meeting in Glasgow where world leaders will sign up to targets on Carbon. In my opinion it was COP21 in Paris 2015 that kickstarted the move to ESG. In addition, the Irish Government will very soon launch a revised Climate Action Plan and only recently a new National Development Plan had a very ESG feel to it.

Finally, as I said at the beginning, ESG is very real. We are responsible for our decisions big or small. Making small decisions sets the scene – I would encourage you to take the ESG positive decision – it will pay off.

“The more your firms are seen to embrace the climate transition and the opportunities it brings, the more the market will reward your firms with higher valuations,”

Larry Fink, CEO BlackRock

 

This applies to every business;

This is real, don’t be left behind.

 

Enda Gunnell

Enda Gunnell

CEO
Enda founded Pinergy after 20 years in Auditing & Corporate Finance — both as a chance to move from the touchline onto the pitch, and as an answer to a stagnant Irish energy market that was failing to innovate. His vision is to help create a sustainable energy future for all of us.