I spent the majority of the holiday season talking to random people at holiday parties and found out the average person knows nothing about ESG. Let alone what actually turns their light switch on. In fact most of the people I spoke with believe wind is what currently powers most cities and states these days.
For the fossil fuel worker, they are living in the days when the grocery store replaced the farmer, only this metaphorical and symbolic replacement comes with a disintegrating public image and connection with their end user.
Right now the ESG Economy is on the 1 yard line with 99 yards to go, however, it’s only in the first quarter and the referees have yet to announce the rules or bring the ball out to the field, but the game has already started because companies, countries and economies are already being impacted.
That’s the reality of where we are. The average person has no idea what the E stands for, let alone the S or the G.
E is for Environmental – Environmental criteria considers how a company performs as a steward of nature and their demonstrations of industrial integrity.
S is for Social – Social criteria examines how it manages relationships with employees, suppliers, customers, and the communities where it operates.
G is for Governance – Governance deals with a company’s leadership, executive pay, government contract, third-party audits, government affairs, internal controls, and shareholder rights.
If we are to go beyond the buzzwords and dive into ESG, you can really start almost anywhere. Pick a topic from almost any slice of life or business and it will be applicable to ESG. However, since I used the word “dive”, let’s start with water. Water is a huge component of ESG. From recycled water to how you get your water to how much water – there are many angles and faucets with water and ESG.
For example, how much water does your company use per month? Per year? That’s one of the new specifics companies with ESG investment will have to disclose. This entry level of disclosure opens a slippery slope of transparency.
However, in this example, the intention is behind having a complete understanding or perspective behind your water usage. Where are all the places you use water? Outside of the bathroom and break room, do you use water? Do you have a lawn? Do you use bottled water or reusable water? Are you recycling your own water? Do you wash your own vehicles?
This type of tangible data can become positive for your organization. In this example, disclosing or recording your water usage and consumption can help the shareholders and financial institutions understand how you are using the natural resource.
In a basic ESG example of understanding what the specifics are when watering the plants, if a company would have made the investment of an Automated Water Irrigation Drip System a decade ago, the ten year body of work would show an incredible savings in time, money and resources.
Drip line irrigation for your plants can save time and money exponentially. Here are a couple ways a simple change in intention can lead to accepting innovation into long term savings.
- Prevent disease by minimizing water contact with the leaves, stems, and fruit of plants. This saves time, money and helps manage your image and first impressions. The reality is most flowers are planted for image and decoration, which becomes a cost center with intangible public relations for your organization.
- Drip line irrigation allows the rows between plants to remain dry, improving access and reducing weed growth. Time, money and image again.
- Saves time, money, and water because the system is automatic and reduces water consumption by 60-80%.
- There are even social and civic benefits like reducing the leaching of water and nutrients below the root zone while massively reducing water consumption on uneven ground.
This hyper-niche water example is more of a thought exercise to apply in other areas of your company. The savings on labor and water can be remarkable, but the environmental action and acceptance of innovation are the real take aways in this ESG example.
Then there are the intangibles. Carbon Free and Carbon Zero are acceptable buzzwords for carbon conversations, but really not very applicable with water.
Water is not fungible and has serious cultural and spiritual attributes. So serious that some cultures will protest to protect their water beliefs. Not to mention the science and next level complexity of time, spatial and quality dimensions.
A ton of carbon is a ton of carbon anywhere in the world. Although carbon is considered the “building block of life”, it’s being presented to the people as the modern day boogie man while ESG is a nightlight for your carbon management.
There is sort of a clock ticking on energy company executives, regulators and public officials who do not understand the reality behind ESG. Currently it is primarily public companies and private companies with institutional investors who are on the front line of the ESG change being implemented.
As we enter 2022, wasting natural resources isn’t the only thing under the microscope, it’s how leadership is spending and has spent the public’s and or shareholder money.
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