Last year, in response to demands from institutional investors and the discovery of greenwashing in prior sustainability reports, the Securities and Exchange Commission (SEC) proposed regulation changes around Environmental, Social, and Governance (ESG) reporting. As a result, these new Mandatory Climate Risk Disclosures mean SEC registrants—around 6,600 companies—must disclose information related to their climate targets, goals, and risks.
As climate reporting becomes more important and is increasingly scrutinized, understanding ESG and having access to accurate sustainability information remains a top agenda item for businesses. Even for those not subject to SEC reporting, sustainability is a vital part of corporate strategy. McKinsey reports that sustainable practices create value by facilitating growth, reducing costs, and optimizing investments among other metrics. But according to the World Economic Forum, only 60% of organizations have sustainability strategies in place despite 90% of executives confirming its importance.
While shifting toward net-zero emissions will require hard work and dedication, it is possible and necessary to mitigate the worst effects of a warming planet. In addition to the environmental benefits, taking sustainability efforts seriously can drive company progress, help future-proof their investments, and create better work environments for their people.
To navigate the changing regulatory landscape, beyond following legal guidelines and best practices, leaders need vast amounts of data on their operations to establish a baseline for understanding their emissions and planning how to curb them. For most organizations, this requires partnering with experts who can help shape and implement sustainability plans that meet or exceed industry standards and the requirements of any new regulations.
To understand their current situation and plan a path forward across their real estate portfolio, companies must first conduct something like a gap analysis report, even if only at a high level at the outset, or a commercial energy audit to explore how to keep their facilities operating at peak performance. In a tiered process, they can then expand efforts to collect data from their buildings on emissions, utilities, and energy usage, using building management systems and other technologies to create an interlinked and comprehensive look at a company’s footprint.
These interconnected systems allow leaders to log into a single platform to view information and analytics on company properties, including a figure representing overall consumption within their portfolio. With time, as more information is collected and a baseline is established, the data grows more comprehensive, allowing the platform to develop a thorough understanding of multiple building systems to monitor emissions and pinpoint any discrepancies.
Companies can use this information to establish realistic goals for carbon reduction, including investing in energy-efficient technologies, reducing energy usage by implementing new programs, and transitioning away from non-renewable energy sources. By continuously monitoring and analyzing performance, leaders can make decisions driven by data to help reduce their carbon footprint over time.
Collecting information and implementing new sustainability initiatives may not always be a straightforward process. ESG efforts and reporting also affect multiple facets of an organization, sometimes resulting in difficulties acquiring necessary information or getting pushback from affected business units. Resistance to change makes sense, especially if employees or stakeholders aren’t fully informed on the benefits of new plans. In these instances, leaders must communicate any intended changes, why they matter, and engage with people to get them involved in efforts to develop a more sustainable workplace.
The most important consideration for many is cost, as investing in new processes and equipment can be expensive. Once initial investments are made, however, stronger ESG propositions reduce energy consumption and provide not only long-term cost reductions, but also increased asset value and top-line growth, especially as the public becomes increasingly concerned with sustainable business practices.
Companies across the globe are creating value through their sustainability practices. Others are finding that energy-efficient and flexible workplaces boost productivity and employee wellbeing, with one study learning that even a 2% boost in employee productivity equates to saving $6 per square foot in operating costs.
Whatever challenges arise, finding alignment with capable partners who can help develop and execute plans is key, especially when it comes to understanding and mitigating risks. People want to work for a healthy and communicative employer, and external expertise can give organizations the ability to translate technical information to people in a way they both understand and value.
Connecting Communication and Success
When establishing and implementing ESG plans, open communication improves acceptance and awareness among employees and customers alike. By sharing knowledge and avoiding informational silos, companies can help their teams implement impactful strategies that worked in other regions or situations, as well as explore novel approaches to solving shared problems. Encouraging collaboration also enhances innovation, giving employees access to the knowledge of their colleagues while also boosting company-wide relationships.
Highlighting sustainability projects and keeping people informed allows companies to not only get buy-in from employees on their ESG programs, but also provide a cultural boost. Particularly since the pandemic, employee experience and well-being have become more important than ever, and recent studies have found a significant connection between a company’s positive social impacts and higher employee engagement.
Beyond the cost savings from implementing new technologies or reducing energy usage, creating a better environment for people to work inspires better performance and attracts new talent. Strong ESG propositions boost productivity and purpose within an organization and employee satisfaction is connected to company growth and shareholder returns. As a result, by emphasizing communication and connection with employees about ESG, companies can create a better workplace in addition to limiting their impacts on the environment.
The ongoing importance of sustainability and ESG reporting is changing the way companies do business. Mandatory climate risk disclosures and demands for sustainable practices mean that leaders must understand and address their environmental impacts to facilitate long-term growth, reduce expenditures, and create a workplace that attracts high-quality employees. Sustainable practices help boost efficiencies, cut costs, and conserve energy—and with the right partnership and planning, leaders can achieve their long-term sustainability goals and help create a better future for everyone.
