The ABCs of ESG

The ABCs of ESG

By Kate Zeile and Rebecca Ramsdale

When reflecting on the current state of the world – warming temperatures and rising seas, social unrest and inequality, and corporations’ significant contribution to these woes – one soon realizes that business as usual is no longer an option. This certainly holds true for the building sector, which is responsible for roughly 40% of the world’s annual CO2 emissions, and the construction industry, which is responsible for over 30% of the world’s natural resource extraction. Stakeholders, investors, and the public alike are asking more of businesses, demanding that they consider the environmental and social impact of their operations in addition to profit. Sustainability, resilience, and corporate responsibility have emerged as leading indicators of a successful company. What once was a bottom line is now a triple bottom line: people, profit, and planet.

While tracking and forecasting profit is nothing new for businesses, keeping tabs on the other two ‘p’s’ in the triple bottom line – people and planet – is often a foreign concept. That’s where Environmental Social Governance (ESG) Reporting comes in. ESG Reporting provides a framework for businesses to assess the current state of their environmental and social impact, disclose this information to the public, set tangible goals for continuous improvement, and track progress over time. ESG gives businesses the opportunity to honestly evaluate their impact and openly share their journey.

Now to break down the E, S, and G in ESG Reporting:

E refers to a company’s environmental impact, including its carbon footprint, water consumption, waste management, natural resource extraction, material use and impact, etc.

S refers to a company’s social impact. This may include a company’s community impact, volunteering initiatives, diversity and inclusion, emergency response planning, and workplace health and safety.

G refers to corporate governance, which includes company procurement, DEI (diversity, equity, and inclusion) commitments and initiatives, stakeholder engagement, company policies and values, and supply chain management.

 What is ESG?

Now that we have broken down ESG (Environmental, Social, Governance) and we know that many companies are making ESG commitments, let’s dive into what everyone wants to know…does ESG affect me?! Naturally, businesses that make the ESG commitments are going to notice the change from within first. Company policies, procedures, and marketing strategies will shift. The company employees might notice a positive impact on their wages and benefits. ESG can have an immediate positive impact on employees by improving their morale and productivity. Team morale can do wonders for innovation and productivity, supporting a healthy business. Workers are more likely to bring their best self to work if they support the company values and are compensated fairly. This is more important now than ever – no longer will workers accept strained, unfair, and unethical working conditions. The pandemic has sparked a revolution of reflection and demand change. And this change at the individual level is crucial – after all, companies are just a collection of people who are inspired to do something bigger than themselves.

Because we love to hear stories of those doing good through business, ESG bragging is welcomed! ESG initiatives can set companies apart from their competitors. Customers recognize this healthy competition and are holding companies responsible for addressing climate change and social issues. Buyers are using their power to vote with their dollar and drive change. Shoppers want to feel confident that their products are sourced responsibly with environmental and social impacts in mind. This is how ESG stretches beyond the business and positively impacts society and communities. ESG reduces pollution, preserves Earth’s resources, and creates new opportunities. This means that ESG has a positive impact even on those who do not purchase the product or service.

We have seen the headlines… Carbon Neutral by 2050, Net Zero Carbon by 2030, Net Zero Energy by 2025. We would like to applaud and highlight a few company initiatives and programs in Verdical Group’s network, including Hudson Pacific Properties, Kilroy Realty Corporation, Google, Apple, B Corporation, 1% for Planet, and the JUST Label, to name a few. We encourage all companies to strive for positive social and environmental impact, since ESG initiatives positively extend into our community.

Here at Verdical Group, we have embodied the triple bottom line since day one. We are a high scoring Certified B Corporation, meeting rigorous standards of social and environmental performance, accountability, and transparency. We are also a 1% for the Planet Member Company, which means we donate 1% of our annual revenue, not just profit, to environmental nonprofit organizations. Our company mission – building an equitable net zero future for all people, now – inspires our team to work toward positive environmental and social impact every single day. We recently achieved a major milestone that brought us closer to the net zero future that we envision: Verdical Group achieved net positive across all business operations dating back to our company founding in 2012 (read more here).

Tell Your Story

Environmental, Social, and Governance (ESG) might initially seem complex, but fundamentally ESG is a storytelling exercise — collecting all the wonderful stories about your company making a positive impact on people and the environment (and sharing it in a beautiful annual report!).

Those threads come from your work, team, culture, efficiency, and policies. Verdical Group is here to guide the process and provide the experts to create performance baselines, set goals, calculate your carbon footprint, and tell your story. Verdical Group works with clients to set up or update their desired third-party ESG reporting platform, develop and distribute surveys, benchmark data, and provide detailed analysis, including a roadmap for next steps along your company’s ESG journey. 

In addition to our portfolio-wide “big picture” services, we also provide individual building level services. For example, down the road, if a client would like to engage VG as sustainability consultant on a new corporate headquarters project, we are a nationally leading sustainability consulting firm, ready to dive in and lead the charge to develop a state-of-the-art sustainability project.

ESG reporting is an absolute must for companies to assess, track, and enact positive social and environmental impact. We have worked toward positive ESG impact since our company’s founding, and we are always thrilled to help others do the same.

Thinking about ESG? Do you have questions about how you can incorporate or highlight ESG at your company? Please contact us to learn more