What Does ESG Mean to Your Business? Part 2: Planet

Blog-February2021-2-2

ESG refers to business leader’s focus on Environmental, Social and Corporate Governance in relation to their long-term plans. What can a focus on ESG mean to your business or profitability, and how can companies use employee engagement tactics to further the cause?

 

In 2017, over 140 CEOs from the World Economic Forum International Business Council (IBC) issued a “Compact for Responsive and Responsible Leadership”. The CEOs developed a framework that companies can use to track and demonstrate long-term sustainability. This compact aligns corporate goals to the long-term goals of society and identified “Sustainable Development Goals” (SDGs) as the roadmap for that alignment.

 

In our February and March blog posts, you’ll find an overview of the 4 pillars of ESG, and what they can mean for your business.

 

The 4 pillars of ESG that will be covered in this series of 4 blog posts are:

Governance

Planet

People

Prosperity

 

Part 2: PLANET

This pillar addresses the plan to protect the planet from both degradation and consumption and production. The consensus is that urgent action is needed on climate change to support the needs of both the present and future generations.

Business both depends on, and impacts, our natural environment. Today, there is a business risk associated with failing to understand and respond to environmental considerations. The 6 SDGs that are relevant to corporate disclosures include:

  • Clean water
  • Affordable energy
  • Responsible consumption
  • Climate action
  • Loss of resources: under water
  • Loss of resources: on land

 

Across these reporting frameworks, there are 7 environmental impact areas:

  1. Climate change: Greenhouse gas emissions and reporting on governance and risk management. Setting strategy and metric targets as well as ensuring that companies are committing to science-driven targets (net zero by 2050)

 

  1. Nature loss: Estimate and report on land usage affected by the business, annual change that is expected and any endangered species that are in the areas and affected.
  2. Fresh Water: Availability and amount of fresh water that is consumed, reporting of water-stressed areas. Fresh water is required for food production, generating energy and manufacturing. Access to water for drinking and sanitation is critical, yet there are still many areas of the world where there is no access to clean water.

 

  1. Air pollution: Emissions and other particulates that pollute the air and are the leading cause of diseases and premature death in the world.
  2. Water pollution: Harmful pollutants that are released into the water, especially excess nutrients that are used in agriculture.

 

  1. Solid waste: Plastic waste is now considered to be the most harmful. Lightweight and single-use plastics that are difficult to recycle often end up in the oceans and can take centuries to degrade.
  2. Resource availability: When genuine sustainability is achieved, we will be re-using non-renewable resources and reducing consumption of renewable resources which will strengthen our economies.

 

Metrics and Disclosures

The International Business Council firms set guidelines to track and report key dimensions consistently. Companies are encouraged to begin reporting on these core metrics as soon as they are finalized. ESG metrics should appear in the management discussion and analysis of a company’s annual report, ensuring that ESG factors will be on the Board of Director’s agenda.

Corporate social and environmental responsibility is increasingly important to employees who are deciding where to work, and to consumers deciding where to spend their money. Companies can communicate these priorities to employees through effectively designed employee incentive, reward and recognition programs. People pay attention to what is measured; setting goals aligned with corporate initiatives such as recycling and energy conservation, etc., will focus employee attention on company goals.

Companies must understand the impact of environmental concerns on long-term value creation and use best practices to engage and motivate all stakeholders to maximize success. These new guidelines and reporting mechanisms will provide a consistent platform for companies to use.

 

For more information on ESG and its impact on your business, register below for the The Connection Between EE & ESGEmployee Engagement & Environmental, Social, Governance” webinar event.  

And stay tuned  for Part 3 in this series where we will cover the 3rd pillar of ESG: People.


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In economic terms, the multiplier effect refers to the proportional increase or decrease in final income that results from an injection or withdrawal of capital. In terms of Safety Reward Programs, the multiplier effect might refer to the ROI² (Return on Incentive Investment). A properly structured program significantly impacts overall employee engagement and safety culture, where employees are attuned to safety-related issues, inspired to display “Above & Beyond” safe behaviors, willing to be safety ambassadors, and encouraged to promote learning and support continuous improvement. Such best-in-class programs are designed to promote group objectives and reward individual behavior, engaging, motivating, and rewarding the people behind your success.
 

Fortunately, there are thousands of companies in high-risk industries that have excellent safety programming, training, and coaching in place. Many include safety in their list of core values and have invested heavily in EHS (Environment, Health, and Safety) technology, training, telematics, and personnel. However, too many miss the opportunity to incentivize and recognize individual safety contributions, behaviors, and performance.
 

Programs featuring tangible and experiential awards as the reward currency can have a multiplying effect that pays dividends. Benefits include a more highly engaged workforce, fewer accidents and incidents, reduced claims and losses, lower turnover and absenteeism, better communication, increased productivity, visibility to leading and lagging indicators, incremental coaching and training opportunities, and improved profitability.
 

So, what’s the rub? Are engagement programs focused on employee safety, health, and wellness expensive to implement? Do they only make sense for companies with thousands of safety-sensitive workers? The answer to both questions is no. Properly structured programs can be cost-effective and right-sized for companies with as few as 100 safety-sensitive workers up to those with 10,000 or more. The ROI² of these programs can be expressed as a ratio (in this case, 4:1), with quantitative results showing a savings of $4.00 for every $1.00 invested and qualitative results revealing higher employee morale, which serves as a catalyst for productivity. Safety Reward Programs help to mitigate risk, elevate employee engagement, and improve overall safety culture. They also present an excellent opportunity for companies to simply say thank you to their employees for being safe, committed, and engaged.
 

People have an inherent need to know that their efforts do not go unnoticed. Safety Reward Programs provide the stimulus and energy that encourage employees to perform at their best and achieve new heights.

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