5 Ways ESG and Sustainability Strategies Deliver Business Results
March 30, 2022
The fundamentals of mainstream business models are changing in response to new renewable energy technologies, energy regulation and increasing climate concerns. The question is no longer if companies will shift to clean energy, it’s when. Top organizations are leading a transformation that undistinguishably links environmental, social and governance (ESG) outcomes with competitive advantage.
What is ESG?
Positive ESG outcomes can protect and strengthen your organization’s bottom line as well as demonstrate its core values related to stakeholder accountability, equality, diversity, inclusion, corporate social responsibility, and environmental concerns.
How ESG is Defined
E = Environmental Criteria
The E relates to how an organization affects and is affected by its environment. Sustainability planning in all areas of your business and supply chain is essential to successfully address the E in ESG.
S = Social Criteria
The S is about how your company manages its relationships with employees, suppliers, customers, and communities.
G = Governance
The G represents the internal systems, stakeholders, controls and procedures that your organization has in place to govern itself, make effective decisions, and comply with regulations.
Sustainability Plays a Key Role in ESG Strategies
More than just the E in ESG, sustainability plays a major role in
your organization’s ESG outcomes. Not only does sustainability enable minimal negative impact on the environment, community, and economy–both locally and globally–it creates a positive effect on many levels. It protects the environment while helping you meet carbon reduction goals and requirements, reduce energy costs, and demonstrate corporate social responsibility.
Why ESG and Sustainability Planning is Important
Integrating renewable energy into your energy strategy, and tracking the subsequent carbon reductions, is just the beginning. The events of the last few years have put shined a light social and governance practices of organizations in the spotlight, giving ESG practices and ranking even greater relevance–not only for investors, but consumers, suppliers, and the government as well.
How ESG Practices Create Business Value
The ESG values and practices of your business can not only impact its resiliency, sustainability, and surrounding community, but the global economy and environment as well. Multiple studies indicate that companies considered to be good corporate citizens perform better financially than those that don't. Here are five ways in which ESG can create business value for organizations in all markets and industries.
- What’s Good for the Environment is Good for Business - If your organization has not yet integrated renewable energy into its commercial energy mix, you are likely seeking best practices to do so because clean energy is good for the planet and it makes good business sense. Whether it’s a wind or solar energy project or buying renewable energy credits (RECs), renewables help to reduce costs and energy price volatility while offsetting carbon emissions and boosting public appeal.
- Energy Independence - The increase in extreme weather events is increasing energy price risk. Gaining independence from commercial energy supply sources by generating your own electricity through renewable energy, or subscribing to a community solar program, reduces or removes your dependency on the local power utility and helps to stabilize price risk.
- Cost Reductions and Financial Incentives - Local, state and federal governments support the move toward renewable, clean energy and lowering greenhouse gases. Therefore, several financial incentives and assistance programs are available to organizations participating in clean energy initiatives. These programs can vary greatly by region, so it pays to have a sustainability plan in place and to understand the clean energy opportunities in your area.
- ESG Enables a Powerful Return on Investment - The events of 2020 proved to be a major turning point for ESG investing with environmental, social and governance criteria ranking alongside traditional financial metrics. Also, when governing authorities trust corporations, they are more apt to award them the access, approvals, and licenses that afford fresh opportunities for growth. Likewise, consumers are more apt to purchase from organizations that are viewed as environmentally and socially responsible.
- A Strong ESG Proposition Boosts Public Relations - It’s not just the government and investors who are analyzing an organization’s ESG. It’s B2B clients, consumers, partners, brokers, developers, suppliers, job seekers–the list goes on.
McKinsey & Company reports, “A strong ESG proposition can help companies attract and retain quality employees, enhance employee motivation by instilling a sense of purpose, and increase productivity overall.” Correlating ESG with higher job satisfaction, McKinsey states, “Field experiments suggest that when companies give back, employees react with enthusiasm… Just as a sense of higher purpose can inspire your employees to perform better, a weaker ESG proposition can drag productivity down.”
Getting Started with ESG Planning
The stronger your organization’s ESG proposition, the greater the chance for long-term success. To remain resilient, competitive, and environmentally compliant, you need to develop and execute an effective, and public-facing ESG and Sustainability plan.
Your Zero-Carbon Future Begins with a Partner
There are myriad approaches to developing a sustainability plan that enables positive ESG outcomes and specific criteria by which organizations are evaluated. As part of NextEra Energy Resources, the world’s largest generator of renewable energy from wind and sun and a leader in battery storage, NextEra Energy Services has the resources and expertise to provide sustainability plans and solutions that meet the evolving energy, budget and ESG reporting needs of your organization.
As the world leader in sustainability, NextEra Energy is committed to environmental excellence. Since 2011, the NextEra Energy family of companies have invested more than $100 billion in clean energy. Read more about how our company walks the walk in our NextEra Energy, Inc. ESG report. At NextEra Energy Services, we help large organizations like yours develop a roadmap to decarbonization and leverage our enterprise-wide expertise and solutions to execute on time and on budget, meeting your business and sustainability goals.
If you’d like to discuss your ESG options and best practices for integrating sustainability planning into your organization’s energy strategy, contact us to start the conversation.
Resources:
Five Ways That ESG Creates Value
Sustainability for Consumer Business Companies, A Story of Growth
Betting big in the fight against a changing climate
Sustainable investing is set to surge in the wake of the coronavirus pandemic
Three Unexpected Trends Driving 2021 ESG Inflection
The Expanding Case for ESG in Private Equity
NextEra Energy Services is a subsidiary of NextEra Energy Resources and NextEra Energy, Inc. NextEra Energy, Inc. is a Fortune 500 company; NYSE NEE.