WHAT IS THE ‘E’ IN ESG?

Of all the letters in ESG, the E – which stands for environment – is probably the one most people are familiar with.

Environmental issues pop up almost daily in the media. Maybe you participated in last month’s Earth Day, or watched Seaspiracy on Netflix, which explores the deleterious effects of commercial fishing. Or you might have seen that viral TIME magazine cover by Malaysian artist Red Hong Yi, which features a large world map composed of 50,000 matchsticks about to go up in flames.

After decades of little progress, the world’s policy makers are finally showing they’re ready to make systemic change when it comes to climate action.

China has committed to becoming carbon neutral, while the European Union has committed to becoming climate-neutral (with net-zero greenhouse gas emissions) by 2050. US President Biden has also pledged to combat climate change and achieve net zero emissions economy-wide.

Shifts in public awareness of climate change and the need to address it have put pressure on policy makers.

These developments are not to be underestimated.

The public’s growing awareness of ethical concerns in modern farming practices and perceived health benefits of plant-based diets have seen the global meat and dairy sector experience unprecedented disruption. It has also fuelled the rise of the plant-based food market, which is expected to grow to US$74.2 billion by 2027.

Covid-19 has also proven a great accelerator in the move towards climate-sensitive business and investment. It has sped up the spread of digital technologies, a necessary precondition for technology shifts toward low-carbon economies, Georg Kell, the founding director of the UN Global Compact, told Forbes.

Kell also posits that it’s now commonly understood that reducing emissions and the material footprint of products (such as plastics), correlates with increased brand value, competitiveness and market access.

Leading tech companies such as Microsoft and Apple have long understood this. Both were early adopters of clean technology to power their data centres and production, and have pledged to become carbon negative by 2030.

The same patterns are playing out in the financial world.

Last month, Temasek and BlackRock announced a new partnership called Decarbonization Partners. The partnership will launch a series of late-stage venture capital and early growth private equity investment funds that will focus on advancing decarbonization solutions towards achieving a net zero economy by 2050.

Recent developments, such as the Singapore Green Plan 2030, Net Zero Asset Managers Initiative and the observed increase in investors turning to SPACs for clean-energy bets, show the importance of decarbonization.

McKinsey research has established strong links between environmental concerns to business value in five specific ways:

  • Top-line growth
  • Cost reduction
  • Reduced regulatory interventions
  • Employee productivity
  • Investment and asset optimization

However, there is a lack of shared terminology and benchmarks, which has posed a challenge to investors and companies attempting to account for environmental risk.

That’s why having measurable outcomes is important. Take for example, our Dedoco paper counter.

In a simple but exponentially impactful way, a paper-counting tracker for documents issued via our Dedoco system provides specific data on valuable resources saved. It is also a gentle, albeit constant reminder of how our users are doing their part to save the earth – a useful example of how digitization can help your company do good and help employees feel good too, all while improving your profit margin.

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Do you think your company’s environmental record is strong, or is there room for improvement?

Which digital technologies have you adopted to increase productivity and boost your company’s bottom line, going forward?

Original article: https://www.linkedin.com/pulse/what-e-esg-daphne-ng/