Sustainability and ESG:
Make no mistake, the focus on sustainability is continuing to ramp up and so too is Environmental Social Governance. (ESG)
Jon Field, Sales and Business Development Director at Kissel + Wolf delivers a word of caution to all RagTraders readers, saying, "ignore having a focus on sustainability and ESG at your own peril".
He continued, "Here's three reasons why you need to embrace ESG.
1. Moving forward, your customers, major brands and other companies, are going to be asking suppliers, "what’s is your ESG policy," to evaluate how far advanced you are with sustainability.
2. Who doesn’t want to do the right thing by the environment.
3. To mitigate risk from your business
How does having an ESG focus reduce risk?
Jon says, "It makes sense that the integration of Environmental, Social and Fair Governance (ESG) practices, makes a company less vulnerable to reputation, political and regulatory risk and thus leads to lower volatility of cash flows and ultimately greater profitability. Doing the right things means that you and your business are less exposed.
This might make good business sense, but many companies do not have the faintest idea as to how to go about reducing ESG risks and embracing an ESG".
So what is a good methodology?
Field says, "start by ranking the key risks and opportunities in your business under these three headings."
Environmental Factors - Carbon reduction / Energy Efficiency
Social factors - Stakeholders, Employees, Slave labour where you source your raw materials from.
Governmental factors - essentially governance and communication
He continued, "sustainability is changing the business landscape and is putting more pressure on businesses to evolve Sustainable Business Practices. It is important at a bare minimum to have an awareness about ESG, and ideally, prepare now for action and likely changes in legislation surrounding environmental, social and governmental factors. If your business supplies goods and services to large brands then at some point, large corporations and brands will ask the question, “What are you doing in your business to enable us to continue to use you as a supplier in our business"? This is where having a dynamic sustainability and ESG plan will be of significant benefit along with having metrics & disclosures built into your plan.
Businesses need to implement genuine policies and practices that demonstrate to their customers, and their employees, that they are doing the right thing as a business and an employer, particularly if you want to retain your employees in the present climate of staff shortages and change.
So for companies and employers, doing the right thing has never been more important as far as ESG goes. This means having an ESG focus that's holistic and dynamic across your entire company and your management team. It is not just a matter of sourcing raw products from ethical suppliers or getting your carbon reduction down to zero. It’s much broader than this.
Think strategically about positioning your business to gain a sustainable competitive advantage and how you can best communicate the positive things you're doing effectively, knowing you can't implement everything at once".
Sustainability Road Map - what's yours?
Activating —> Where to start?
Ie. Develop a framework
Reactive —> Can you certify sustainability reporting?
Ie. compliance management / develop a structure and benchmarks
Proactive —> Can you investigate sustainability issues?
I.e. Refine sustainability performance and structured governance
Strategic —> Can you help us improve our sustainability performance / rating ?
What’s our return on our investment for doing certain things in our business as opposed to doing some things and hoping we get a good outcome.
I.e. Policy and process integration
ESG-ROI (impact, measurement, improvement) Purpose Driven—> How I transform my business to align with my sustainability goals
I.e. Business model transformation Circular economy/ Waste minimisation with ESG feeding into all aspects of your business
Contribution to ESG that will make a positive difference.
Jon said, "I have spoken previously to RagTrader readers about the circular economy. For manufacturers, it's important to start understanding the importance of moving from a linear to circular economy, after all, we have finite resources on the planet so let's not treat resources as a 'one use' resource and regenerate wherever possible.
This means considering things like:
—> Designing out waste and pollution from your business
—> keeping products and materials in use, and
—> regenerating natural systems
If we create pollution when, harvesting resources (taking) then adding value to those resources (making) selling the finished product (using) then we all have a responsibility to ensure once the product has reached it's 'use by' we either recycle it, or dispose of it, in a sustainable way”
In the clothing and consumer goods industry until recently, most clothing and consumer goods were manufactured OS due to cheaper labour costs and pre Covid reasonably timely supply chains
As a final thought, both consumers and investors more than ever before are looking for these types of businesses and opportunities.
Kissel + Wolf Australia only sells and supplies Printing Equipment that supports best in class waste reduction manufacturing, energy efficiencies along with a comprehensive certified consumable product range to use on their range of digital printing machines *.