How did we get here, and where is this all going?

Well, ESG turned 20 this year and it doesn’t look like it’s going anywhere soon. Particularly with the 2030 deadline on the near horizon, and increasing focus on climate pledges and deliverables will become a topic of conversation and scrutiny – i.e. how did we all do? And yes, ESG formally became a conversation back in 2004, but it had a long gestation with many sources telling us that it was 1994 that John Elkington established the “triple bottom line”. Prior to this point, it was widely accepted that financially successful companies and organisations would and should be based on the traditional (financial only) bottom line. However, Elkington brought in the idea of the triple bottom line, asking for increased scrutiny and interest in people, the planet and prosperity.

In the two years leading up to 2006, conversations were gaining traction around the veracity of ESG increasing/accelerating sustainable returns rather than stymieing financial growth. Fast forward all the way to 2018, and we learn from Greenbiz through their “global sustainable investing assets…” paper that ESG assets under management had crested 30 trillion dollars, worldwide. It is estimated that by the time another five years has passed, that figure will be approximately $53 trillion.

As difficult as it is not to be drawn in by gaudy numbers with a trillion on the end, we can look at those numbers as a confirmation of, and commitment to achieving sustainability that looks at all measurable areas of commercial life and organisations’ various functions.

What does ESG mean for energy procurement and supply chains?

Well, in its strictest form adherence to ESG fundamentals and strictures means that a company, your company, is investing in trust and value. That’s the long and the short of it, but we hasten to add that the sustainability element is of course woven into trust, without trust your commercial and relational outputs will be short-lived – but you know that already.

Here’s a helpful, paraphrased summary from one of our presentations that has aged particularly well since its 2023 writing.

“From a company perspective, embracing ESG speaks to motive and commitment, which then screams trust and trustworthiness… If the key stakeholder ecosphere in which you operate feels valued through the sharing of active and committed action on important issues, you’re in great shape. Environmental issues, social justice imperatives like the abolition of modern slavery at the primary production end of the supply chain for instance, like the governance that puts in place and confirms an entity’s commitment to positive and sustainable impacts, these are practises that confirm your status as a valuable participant in the enrichment and sustainability of the environment in which you all operate… and live.”

And it’s focuses like human rights, indigenous engagement, and from a governance perspective, ensuring the presentation of verified and reportable outcomes on emissions that will hold you in good stead as we head towards 2030.

In summary, establishing and nurturing opportunities to enhance your corporate reputation through well organised, and standardised ESG reporting would be an excellent next step towards building stakeholder value. It follows that your partners, those entities with whom you already have a mutually beneficial relationship, will value the opportunity to continue and even augment current partnerships, because like a fulsome and genuine commitment to ESG principles, it just makes sense.

OK, so where are the cracks? Here are 4 points to consider.

Well, if the last five years or so has taught us anything, it’s that we must expect the unexpected. From worldwide pandemics to issues with various shipping lanes, weather patterns, civil and military unrest, we say that the only constant is change/upheaval/disruption. But here are 4 points that may apply to you, right here, right now:

1. Investment in ESG compliance, in the short term at the very least, is expensive. There’s no getting away from that. But if your strategy is around building trust and good corporate citizenship over time to develop and sustain commercial relationships and opportunities, it’s a no-brainer.
2. The introduction of legislation to help eradicate Modern Slavery and its effects and influence on our supply chains via primary production and manufacture is having a positive impact because the requirements are comparatively clear. Good. However, regardless of where you stand politically, you may find that your regulatory environment, as it pertains to ESG is anything but, at first glance (and maybe the second and third one as well!). Compliance and reporting strictures vary depending on where you are based in Australia. The tyranny of distance and interstate legislation can make consistently compliant reporting difficult – particularly for SMEs that may lack the resources of larger companies and corporations.
3. And of course, ‘greenwashing’ has well and truly established itself as a thorn in the side of those that are doing the right thing by submitting what some have called “misleading statements and data” when reporting on their commitment to ESG.
4. Finally, AI-generated data has become our friend but also has the potential to become an unruly disruptor. It is near the centre of both issues as it gifts us unprecedented volumes of data points to analyse, which can be both helpful and unhelpful, but it also gives us a way to crunch through and organise unprecedented volumes of data to guide us towards ongoing sustainability.

Understanding and balancing these concerns and opportunities is critical to the ongoing success of your ESG compliance, good corporate citizenship, trust and value initiatives. And given the ultimate importance of serving our various communities, both here and abroad, lays at the heart of our commercial or organisational existence, understanding and strengthening our respective ESG postures is key to sustainability.