The old days of mission and vision statements are over. To be competitive in today’s marketplace, a company must be able to clearly define its Environmental, Social, & Governance (ESG) values and practices in place. In fact, many companies require ESG policies to even consider partnering to do business. Identifying and marketing an ESG proposition can be a daunting task for small companies or legacy companies. Even if a business is environmentally driven, provides an obvious benefit to society, and has operations that adhere to many strict governing procedures, it is not a simple process to develop an ESG message.
By Tasha Jamaluddin, Managing Director – Epcon Industrial Systems, LP
One aspect that makes the ESG development process complicated is that many of the individual elements – the Es, the Ss and the Gs – are themselves intertwined; social criteria overlap with environmental and governance through compliance with EPA regulations and labor laws, as well as broader concerns about sustainability, safety, and wellbeing. This step-by-step guide will not only demonstrate how to define a company’s ESG values, it will also suggest methods to effectively promote them to help it stand out.
Start With the Core Business Products & Services
The most important ESG values for a company should be rooted in what it actually does: the products and services it provides. Broadly speaking, how does a company help mitigate climate change or preserve natural resources? For example, Epcon’s primary ESG centered products are 1) air pollution control systems, 2) thermal cleaning system, and 3) providing comprehensive engineering for custom systems.
Now, one can expand upon their products and services to describe how they limit the negative impacts of industrial manufacturing on the ecosystems and greater communities they operate in. For example, the positive effects of air pollution control systems is that they destroy toxic VOCs and keep the air clean for surrounding populations; they also reduce global emissions and the production of acid rain. Implementing thermal cleaning systems similarly reduces wastewater and the use of chemicals cleaners, preserving clean water sources for local communities; and engineering services optimize energy efficiency across the production process through thermal recycling to reduce energy consumption and preserves natural resources, such as natural gas used for fuel.
Consider Partnerships & Organizations
If perhaps it is difficult to see the direct environmental or social good a product and service provide, it is beneficial to consider the activities of the companies and organizations a company supports. A key aspect of your ESG values lies in the context of a business in relation to other high impact ESG companies, and even nonprofit organizations.
For example, say a company has been supplying critical equipment for the renewable, clean energy as well as recycling and waste management industries for decades. This company’s products help its customer’s manufacture products that make the world a cleaner and better place to live. Without their equipment, these companies would not be able to promote their ESGs as effectively. Thus indirectly, their ESG story becomes a part of a greater ESG narrative as well.
It is also beneficial, to consider ways that a company promotes non-profit organizations and the local community. Does the company donate any of its profits to a charity or provide internships? Perhaps they do a toy drive for the local shelter or give employees a paid day off to volunteer during the holidays, or maybe the company executives give lectures at the local community college and open the facility to student groups for learning tours. All of these actives may seem trivial but go a long way in telling an ESG story.
‘Employee’ Focused Benefits & Values
Being a socially driven company begins with how it treats its employees. Its internally focused workplace values are just as important as the external solutions a company provides to others. This includes everything from investing in employee development, promoting worker safety and wellbeing, upholding workplace ethics, to strengthening HR and hiring practices centered on diversity, equity, and inclusion (DEI).
Start by listing the HR programs and employee benefits in place. Does the company offer tuition assistance for continuing education courses, have strong 401K matching program, or prioritize promoting from the inside? While often overlooked, strong HR programs that encourage professional development, and upward mobility, not only make for a healthy company culture, but also strengthen the social fabric of the local community as well.
Industrial Manufacturing involves health and safety risks, such as potential hazards and exposure to toxins and pollutants, so protecting employees, a customer’s workforce, and the communities they operate in, are all a top priority. Consider the Healthy and Safety measures that a workplace has in place to keep employees safe and limit negative impacts of industrial production on the ecosystem. Does it do ongoing safety trainings and ensure managers are OSHA certified, or have reward incentives for the workforce for accident or injury free periods? For example, some companies not only adhere to strict OSHA regulations within their facility and in the field, but they also design each system with multiple safety mechanisms, to ensure the safety of other facilities employees, while minimizing the greater environmental impacts of production through pollution control solutions.
The Working Procedures & Ethics That Are Upheld
The foundation of many ESGs are often derived from the day-to-day business practices and ethical standards. These standards can be so woven into the fabric of the corporate belief systems, that many employees may not even recognize them.
Custom manufacturing involves supply chain risk, ensuring quality assembly, and transportation of finished products. Therefore, who one chooses to do business with, and the materials used, are often developed over time through many difficult lessons learned. To guarantee the quality of a final product for decades to come, a company must prioritize transparent and sustainable sourcing of raw materials; it is important to only do business with companies and suppliers that are trusted. While a stringent procurement process and long-term working partnerships may seem like nothing more than just good business sense, ultimately, they are the social and governance pillars in the ESG handbook centered on quality controls, ethical material sourcing, and responsible supply chains.
Another example of this can be seen by looking at the hiring practices and employee relations at a company. Many companies are founded by entrepreneurial immigrants chasing the ‘American Dream,’ so it is in their cultural DNA to support the underdog and ensure inclusion and diversity in the workplace. Furthermore, collaborative communication is highly encouraged, through ‘open door policies’ to remove hierarchical boundaries, giving each employee’s voice an equal weight. This developed over many decades of realizing that innovation and creative new ideas do not flourish in a topdown workplace. It is therefore beneficial for corporate culture and ethics to evolve over the years and promote key social and government principles centered on diversity, equity, and inclusion (DEI).
The Role of Operating Platforms, Systems, and Qualifications
Governance values tend to be the most difficult to identify, but in many ways, they are the most obvious – right there in the basic software platforms, mundane systems and processes, and necessary qualifications and certifications that are needed to operate a business.
Adherence to strict governance protocols is not an option in many aspects business operations. To keep the Department of Labor, OSHA, or the EPA from shutting down a facility, it must abide by federal and state the law. However, going above and beyond, and upholding higher standards is not just a boost to employee morale but can greatly enhance the ESG narrative.
Additionally, staying competitive and standing out as a leading world class industrial manufacturer requires a variety of certifications and qualifications to prove it. UL listed, NEMA, NFPA, FM/IRI, ASME, AWS, NQA1 are just a few of the professional standards necessary for a company to work with the U.S. Government and some of the largest multinationals. While these are great accolades, they also each carry ESG governance elements in upholding their stringent requirements.
An example of how a software enhanced Epcon’s ESG is illustrated by the decision to switch the company’s payroll, HR, and benefits administration to a new online platform. It not only streamlined the company’s operations and saved a lot of time, the user-friendly cloud software made it easy for employees to access the up-to-date documents they needed. What was a seemingly simple move to a new HR and Payroll system, ended up improving the company’s governance around transparency, and record keeping, as it increased employee agency, access, and control of their information.
How to Make An ESG Message Stand Out
Once the key ESGs values have been identified, it is critical to fine tune the language that is used to promote the ESG story to the world. It is important to spend time looking at how the industry’s key players, such as trade organizations or strong competitors, market their ESGs. Additionally, borrow phrases from expert resources, like the United Nations Sustainable Development Goals, to further enhance ESGs and identify buzz words that are applicable to the business. For example, Epcon selected phrases such as “specialize in regenerative systems” and “Engineering Net Zero or Net Positive Operations” and “closed systems that utilize thermal recycling and heat recovery methods and reduce the demand for natural resources”. Impactful language is essential to successfully marketing an ESG message to the world.