In this month’s Business Bites, Nick Walsh looks at ESG standards – and the benefits of introducing them into your business.
ESG stands for environmental, social and governance
E = environmental criteria of the business. This will include your energy usage, your waste production, your carbon emissions, the resources that you use, areas that all businesses encompass.
S = social criteria for the business. This includes those around you in the community as well as your own workforce. It includes labour relations, diversity, equity and inclusion.
G = governance. This is how you comply with the law, meet the needs of internal and external stakeholders, decisions that you make and procedures that you follow as a consequence.
How a sustainability policy can help your business
It’s not just about compliance. Many employees (current and future) and patients are making decisions about your business daily based upon your ESG credentials.
Your team will have pride in the place that they work if they are able to see that sustainability is a key part of your business plan and strategy. Few want to work at the place that is not sensitive to the future, and its impact on the environment. Through instilling a sense of purpose for engaged and happier staff, productivity will also improve. The perceived impact of the value of their work and impact on beneficiaries, direct or indirect, can be huge. This won’t just apply to your existing team either. Future potential employees are likely to be more sensitive to your business’s approach to sustainability when they are seeking a new employer.
Optical businesses are under more pressure than ever to meet environmental responsibilities. Patients have increasing expectations of businesses to reduce their waste, reduce their carbon footprint, and to improve their sustainability performance. A sustainability policy demonstrates your commitment to an ethical and environment-friendly way of working. Be proactive: get ahead of things before they become an issue. This will also enable you to regularly promote the positives and benefits to your stakeholders. Sustainability, as well as the right thing to do for the reasons mentioned below, can also help you grow your business.
Why not look to develop a sustainability policy for your business? The design and implementation of a sustainability policy may require some initial investment – but there are advantages.
A sustainability policy will help you to:
• Meet upcoming environmental legislation
• Use less energy, create less waste, and so reduce your costs
• Ensure employees and colleagues feel good about working in your business
• Enhance your reputation with environmentally-conscious customers and improve your top line growth
The ABDO SEE Hub is a great place to start. This is where you will find lots of useful guidance including a Sustainability Self-Assessment Tool.
A few areas that may be worth your consideration are:
• Suppliers: do you seek out suppliers who also take ESG and sustainability seriously? Make this one of your ‘go to’ questions when talking to suppliers. You can also actively seek out suppliers who are highly active in sustainability areas. The Silmo Material Library can give you a feeling for some of the work that has already been undertaken by suppliers.
• Single use plastics: does your business still use single use plastics in any way? This may include those carrier bags that you provide to patietnts with their amazing new glasses. Look to find a better alternative be that paper bags (ideally made from recycled paper) or plastic bags that are recyclable and/or biodegradable.
• Energy: reducing the amount of energy that your business uses will be a key way to improve sustainability. You can seek out suppliers through companies such as Beaconplus. Beaconplus have developed approaches to help organisations of all sizes understand their energy cost, consumption, and carbon footprint, with the solutions to manage and reduce, whilst meeting demanding compliance requirements. Whether you are an industrial energy intensive business, clinical practice or office premises, their experience will help you achieve your energy and carbon reduction objectives, such as:
– Streamlined Energy and Carbon Reporting (SECR)
– Energy Savings Opportunity Scheme (ESOS)
– Minimum Energy Efficiency Standards (MEES)
– ISO 50001 Energy Management Systems
– Commercial Energy Auditing
Energy efficiency is also an important part of a company’s strategy, and Beaconplus can advise on these areas, including LED lighting, voltage optimisation and installing smart meters.
• Recycling: Terracycle offers recycling for contact lens-related waste. In addition, it can accommodate recycling for sunglasses, and glasses, safety glasses and swimming goggles via a zero waste box. Recycline offers spectacle recycling for the optical industry and, from day one, its bespoke approach to the optical waste problem has been to separate the mixed plastics and metals, allowing the individual materials to be put back into industry as a raw material rather than go to landfill.
How will ESG help to grow your business?
In the article ‘ESG and growth: a new way of thinking’ from Strategy& (part of the PwC network) we hear that businesses can no longer afford to ignore ESG: “A dramatic acceleration of interest in ESG in the past 12 to 18 months has increased awareness of the impact of companies on the environment and society. Driven by factors such as climate change, social inequality and the impact of Covid-19 – and amplified through social media platforms – ESG has become front of mind for all.”
Stakeholders value transparency because it enables them to make informed choices. Research by McKinsey found that more than 70 per cent of people said they would pay an additional five per cent for a green product, if it met the same standards as non-green alternatives.
Assess which ESG targets might give a competitive advantage
In the aforementioned article, the authors write: “To avoid ending up with a long list of disjointed initiatives, executives should assess how impactful potential ESG actions are (vs their ambitions, stakeholder expectations, importance to business and risks management), and how easy they are to implement (or how ‘doable’ ESG innovations are)”.
The British Business Bank also gives the following pointers (some of which have already been touched upon):
• Incorporating ESG into your organisation could help your business’s reputation as it indicates you have a transparent plan that focuses on helping the environment, supporting diversity and equal opportunities, and ensuring ethical business decisions
• Initiatives that reduce waste and the amount of materials used, such as in packaging, can reduce costs
• Reducing energy costs, such as switching to LED lighting, could also lower overheads through smaller energy bills
• Some employees may be looking to work in more eco-conscious companies committed to implementing favourable ESG policies
• Some customers may be more willing to buy a similar product from a more ethical brand than another business – even if it costs more
It’s not a one-shot deal
Regularly review and update ESG commitments. You may decide to appoint an ESG champion in your business to monitor progress and future direction. Do you take feedback from your stakeholders – such as employees, patients, suppliers, your bank? This may be a great way to inform your ESG strategy.