ESG And Sustainability In Business: A New Way Forward

Jen Root is the Co-Founder & CMO of Manifest Commerce, a sustainable logistics solution for omnichannel retailers.

The term "sustainability" is a hot topic in many businesses today, with an increasing number of organizations adopting and enforcing sustainable practices and even assigning key c-level roles solely focused on progressing sustainable business practices.

We are now in a time where sustainability talk is more than just buzz words thrown about in marketing meetings. The issues surrounding environmental and social issues are metrics that businesses are tracking, and, in some instances, are tied back to growth KPI metrics such as revenue, employee retention and, more recently, investment viability. I think we are past the point of sustainability as a trend and moving toward an era where sustainability is imperative for a business' adaptability and growth.

At my company, Manifest, we implemented every initiative we could to create a positive impact on our environment by eliminating plastics, using renewable energies in our warehouses and off-setting carbon throughout our fulfillment centers. These pillars are a sustainable compass for our business, deeply integrated into our day-to-day business operations. 

So how can your business stay ahead of the sustainability curve, and where do you start?

Integrating Sustainable Practices Into Your Business

First, let's look at how sustainability is defined and measured by key global stakeholders.

The United Nations World Commission on Environment and Development defines sustainable development as "Development that meets the needs of the present without compromising the ability of future generations to meet their own needs."

The United Nations put forth 17 Sustainable Development Goals outlining the major issues affecting our people and planet today and created a blueprint, outlining the actions required to chart the course toward progress. And many companies, including auto companies like Toyota and Fisker Inc., are following suit.

These major goals are creating frameworks to reduce inequalities, encourage responsible consumption and production to take positive climate action. The overarching goal is to ensure natural resources are not over-tapped and renewable resources are utilized when possible.

Businesses adhering to these sustainable practices often march toward three key focus areas, with big goals of reducing natural resource consumption (environmental) and improving human equity (social) and corporate transparency (governance). These metrics are referred to as ESG for short and are typically measured in a CSR, or corporate sustainability report, often by a third party or auditor.

Let's look deeper into these metrics and how you can apply them to your day-to-day business operations. 

Environmental

Environmental metrics are evaluated based on a company's energy usage, waste production, pollution contribution and natural resource conservation. The treatment of animals is also included in this category and is especially important for scientific research and personal care companies.

How your business can create a positive impact:

• Inspect your operations and reduce your carbon footprint.

• Evaluate energy usage and implement renewable energies.

• Audit your waste stream and use non-toxic packaging materials.

Many consumer-packaged goods companies now have a "zero waste to landfill" goal, such as Nestlé, which is working toward a 100% zero-waste goal by 2030. There are a number of third-party certifications to help track and validate these goals, such as PEER and LEED for energy renewal and TRUE, created to help organizations understand how materials move through their facilities and help redesign a re-use plan.

Social

Social criteria touches on a company's relationship with their employees, suppliers and community. Working conditions, including health, safety and equitable pay, are important factors for measuring this area. This category also includes a company's charitable contributions and community volunteer involvement.

Ways to create social change:

• Provide a healthy workplace.

• Offer paid volunteer days.

• Enforce an equitable pay structure.

• Encourage giving to charitable causes.

Governance

Corporate transparency is important when measuring the governance of a company. This metric is focused on ensuring ethical business practices and partnerships are governing the day-to-day of business operations. Accurate, transparent and forecastable accounting methods are imperative for success in this metric, including equitable voting processes for stockholders. These are reviewed and also include fair allowance to vote on important issues.

Conflicts of interest and board selection are inspected closely with the primary goal of preventing unwarranted political contributions and avoiding favorable treatment and bribe-related activities.

Here are some ways you can incorporate governance in your business:

• Create a multi-touch board selection process.

• Implement transparent accounting practices.

• Plan and execute important operations with key stakeholders.

So what can you do to ensure you are tracking toward these goals and making progress? These goals can be enforced by incentivizing change within your organization and assigning key leaders to guide and motivate your team. And don't forget to celebrate your wins along the way. It's not always going to be perfect, and change does not happen overnight, so progress should be recognized and accelerated when possible.

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