ESG issues include addressing natural-resource scarcity, climate change, income equality, and social justice, among other topics and priorities.
ESG stands for "environmental, social, and governance," a set of standards indicating an organization's sustainable and ethical business practices. ESG issues include addressing natural-resource scarcity, climate change, income equality, and social justice, among other topics and priorities. While these issues often reside outside traditional performance metrics such as growth and profitability, those who stake investment money, employment, or time in a company want reassurance that the organization is taking responsible positions and actions on important ESG issues.
The concept of integrating environmental, social, and governance factors in investment decisions is not new. However, many businesses have only recently begun to formally adopt ESG principles, reflecting a growing appreciation that success means serving the interests of not only shareholders, but all stakeholders, including customers, employees, suppliers, and communities alike.
The COVID-19 pandemic reinforced the importance of incorporating thoughtful ESG strategies into long-term business planning. Companies that have invested in employee health and wellness, resilient supply chains, and cyber-secure technology for remote work have been better positioned to thrive during the pandemic crisis.
The business case for ESG
Most ESG strategies begin as a risk-management tool or in response to investor demands. But companies that fully commit to a long-term ESG program can grow revenue, reduce costs, minimize regulatory and legal intervention, and optimize investment and capital expenditures.
ESG also helps to drive employee engagement and retention. Many employees expect their companies to embrace ESG principles in return for their loyalty and commitment to a company based on its reputation for social awareness, ethics, and shared values. For a company to maximize the benefits of incorporating ESG issues, it is important that ESG issues and programs are incorporated into, and aligned with, the overall company strategy and operations.
Overcoming integration hurdles
Establishing an ESG strategy doesn't typically happen overnight. It's a journey. The good news is many companies have already begun the journey, informally, by monitoring and measuring their "E"; issues as part of air, water, or waste regulatory compliance programs or by tracking "S" or "G" issues internally. Therefore, a good starting point is identifying existing activities contributing to a formal ESG strategy.
Let's get started
If you need a partner to help you start or advance your ESG journey, Barr is ready to listen and provide strategic advice and technical support. We can help you identify your destination and your progress and develop a plan to make sure you are going in the right direction. Typically, this starts with a review of your existing ESG policies, programs, processes, and reporting. We can provide training at all levels of your organization, as well as technical support in establishing ESG program priorities and approaches to achieve them.
Your unique opportunities and challenges will define the type of support you will need, and Barr will be ready to develop customized solutions. Interested in developing renewable energy on a non-greenfield site? Learn more about how Barr can help.
In 2020, a major petroleum refining company hired Barr to support its ESG performance reporting according to the frameworks from the Global Reporting Initiative (GRI) and the Sustainability Accounting Standards Board (SASB).
Barr helped a midstream oil and gas company develop an ESG framework. The work involved two phases—ESG training and ESG framework development.
Barr is helping a confidential oil and gas investment firm incorporate ESG factors into its investment decisions and corporate policies.