Environmental, Social, and Governance (ESG) matters have risen to significance throughout the world. Taking over what was referred to as ‘CSR’, ESG has been bundled together for organisations to demonstrate their commitment to resolving these matters and having a measurable impact which can be reported on. To ensure companies are accountable and take appropriate steps and action to make a difference in this space, they are developing policies to show commitment.
To breakdown examples of what may be included, it’s important to consider each of the ESG factors and what may be included under each:
1 Environmental
Includes the organisation’s carbon footprint, waste management procedures, pollution levels and water usage and energy sources and use.
2 Social
Includes labour practices, human rights, and diversity and inclusion initiatives.
3 Governance
Includes board diversity, transparency, ethical business practices, and modern slavery considerations.
Businesses can play an important role in the reduction of carbon and its policies can help facilitate this. It is important that these policies consider renewable sources of energy as a means of actively reducing their organisation’s carbon footprint.
ESG considerations are becoming central to how organisations operate and enabling them to contribute positively to the planet and society. Having a policy in place will mean decisions are made in line with the policy principles and consideration of those decisions is holistic.
Looking at Australia, as a nation it is recognised as a strong performer in the ESG space generally on the basis of having a robust legislative framework for many social issues such as anti-discrimination, human rights, workplace health and safety, anti-bribery and anti-corruption. With its strong corporate governance and financial disclosure frameworks, it supports ethical business practices and avenues to report any unethical matters. However there are still further advances in the environmental space that can be implemented to help with the achievement of net zero.
Businesses can play an important role in the reduction of carbon and its policies can help facilitate this. It is important that these policies consider renewable sources of energy as a means of actively reducing their organisation’s carbon footprint.
Establishing a policy position will allow decisions to be made on the basis of the policy principles which can only be a positive thing for the business and its operations. PWC has reported that “more than 60 percent of people are basing their purchasing behaviours on sustainability and ethical criteria, and this is growing by 10 percent each year.” ¹
Consumers are expecting businesses to engage in practices that support ESG initiatives. Having clear and actionable steps to improve ESG within the business can play a role in supporting consumer expectations. PWC research also explains that many more corporations and organisations will increase their ESG ambitions and disclosures in line with growing community expectations including extending their focus from beyond net zero to also include broader environmental impacts.
Renewable sources of energy can play a significant role in the reduction of carbon. Australia has a national target to increase renewables in the generation mix to 82 percent by 2030 which will be an increase from 27 percent today (AFR).²
Businesses should consider this in their policy development and business practices to identify the most appropriate ways in which they can support renewable sources of energy in their practices or seek to completely transition to this as a means of powering their operations.
The increasing favouring of businesses that can clearly demonstrate a commitment to sustainability shouldn’t be ignored. The adoption of renewable energy sources can showcase a corporation’s commitment to such responsible business practices and help send a message to its consumers and stakeholders that it’s serious about making change. There is increased pressure for businesses to actively do something about emission standards and implement sustainable practices through their operations.
The development of an ESG policy provides the setting for businesses to set the standard for what needs to be done, and present to the world their commitment to implementing change. Renewable energy should be at the forefront of this change from an environmental perspective for the total impact it can make to achieving the goals proposed for net zero.
Sources:
¹https://www.pwc.com.au/important-problems/esg/2023-esg-trends.pdf
²https://www.afr.com/policy/energy-and-climate/renewable-energy-solutions-firms-power-ahead-20230621-p5dicx
