ESG (environment, sustainability, governance) has gained mainstream significance as never before. Nations are pledging to move to carbon neutrality, institutional investors are adopting new sustainability critera, and energy majors unveiling green transition strategies.
NEO continues its 5 Questions series with a Q&A with Stefan Bojanic, Sustainability Lead at Emex, a cloud-based platform for health and safety and ESG monitoring services.
Do you see any increase in interest from your clients in adding monitoring ESG and sustainability?
Yes. Definitely. It has been unavoidable. Companies are moving to incorporate various sustainability practices into their business. But it’s different for each sector, and it is relatively new for some, so they are all trying to get organized.
We have lots of clients in mining and extractive industries, energy and construction that have been using our software to monitor health and safety results. When we meet nowadays, they also ask about ESG. They are under increased pressure to respond to board questions and investor questions on the issue.
Corporations want to put a process in place to show adherence to an increased ESG focus in their own business models across the globe. They need services that let them identify relevant data and assemble it in a useful way.
What is the big difference between health and safety and ESG/sustainability?
The point of collecting lots of data is to put it together in a way that helps make good decisions, these are tasks that we support. I would say that the big difference is that in health and safety, the timeline is immediate. With ESG, we are talking about longer-term impacts and activities.
Yes, corporations still want to take decisions right now on sustainability matters, that’s no different. But the decisions sometimes require a different strategy. Yet, at root the idea is the same. Managers need solid data to make good decisions and show action and evidence in producing more sustainable practices.
Another important difference to understand is that definitions for key performance indicators in sustainability are still evolving, whereas those for Health and Safety are more established.
How does this vary by industry?
It varies a lot!
A first element is obviously linked to the impact of each industry. If you operate in an industry that has a significant negative impact on nature (e.g. air or water pollution), you will measure your impacts at least monthly, in order to manage them and take the appropriate decisions.
A second element, beyond the industry, is the capacity of organizations to listen to their stakeholders and understand their expectations. Even within the same industry, expectations can be different depending on your context. If you operate in Europe, or alternatively in Asia, your local community will usually not have the same expectations and needs. This is why it is so important to have proper local stakeholder management plans.
To summarize, clients are asking for different services depending on their maturity level, their impacts and their stakeholders expectations.
What is the main catalyst that you’ve seen for the growing interest in sustainability over the past year?
The increased awareness around sustainability is a result of a lot of factors: the generation Y & Z mindset, increased pressure from society, and actions from leadership.
A lot of the increased interest in information services products is related directly to moves by ratings agencies. Credit ratings agencies, like Moody’s and S&P for example, have acquired ESG ratings services, they are paying attention. A CFO can now see that the fact that financial ratings agencies are including ESG criterion in their evaluations could affect a corporation’s ability to raise money. This makes a difference.
What are the next steps ?
This could have interesting impacts. How far will CFOs go in the universe of non-financial performance? Will we see Chief Value Officers? There will likely be steps towards integrated thinking.
Nonetheless, as already mentioned, not all companies are at this maturity level. If we speak about climate change, a lot are still figuring out the best way to measure their CO2 emissions (Scope 1, 2, or 3). So there is a lot of action that needs to be taken in the future and a lot of work ahead in order to make that happen.