Angad Rajain, Global CSO & IFM Head, Tenon FM deconstructs the complexities of the ESG framework through the lens of facility management, explains its essence and benefits, and lists down an action plan for companies to become ESG-compliant.
There is a lot of misunderstanding about what ESG is and what it entails. Many people mistakenly use CSR and ESG interchangeably; while they do have some overlap, they are not the same. In a nutshell, ESG stands for Environment, Social, and Governance. To put it in simple terms, this is how organisations measure and monitor how far along their organisation is on the path to sustainability.
If I go a step further, ESG becomes the driving principle for how a company defines its vision and goals to function ethically and responsibly, in a sustainable manner. It provides a framework for tracking and disclosing how our operations have a negative or positive impact on the environment in which we work.
But what does it mean?
Let us take carbon emissions as an example. If you manage a BPO and have 1,000 cars ferrying staff between their homes and the office every day, you will be negatively impacting the environment. However, if you switch from a diesel or petrol fleet to electric vehicles, you’ve minimised your impact on the Environment.
India has made a commitment to become net-zero by 2070, and we are all responsible for this: the government, local authorities and businesses such as ourselves.
The Social component of ESG focuses on building a diversified, safe and equitable work environment in a wider sense. How do we separate the social environment from the fundamental definition of CSR? Are we, for example, paying compliant and fair wages to our employees? Are we paying equal pay for equal work, irrespective of gender? Do they meet the minimum wage requirements? This is where the ESG program’s Social component comes in.
Now that Governance has tied the environment and sustainability together in a framework, firms can view their policies and governance systems in a transparent manner, and whether they are doing enough to safeguard the rights of all stakeholders. With this, I’m referring to our employees, consumers, supply chain partners, the larger community, as well as our shareholders and investors, who are equally essential to us.
By adhering to ESG principles, we are building a work environment that attracts and maintains the best talent, becoming an employer of choice for those who want to work with us. As facility managers, real estate professionals and business leaders, this is extremely important to us.
Regulatory standards have also changed. SEBI, the regulatory agency that oversees all listed companies in India, has mandated that the Top 1,000 companies by market capitalisation must henceforth report on ESG. This is no longer an option or a best practice; it is now a standard, and I believe the government will increase this remit in the same manner that they have expanded the CSR spend remit.
We also need to think about how we can make our company more investor-friendly to both public and private investors. By 2025, $53 trillion will have been invested in companies with good ESG policies. If you want your company to attract the greatest investors, ESG is something you’ll have to concentrate on.
The five steps
- Identify your ESG objectives and missions, then define relevant goals. E.g. reducing carbon emissions from vehicles. The Tenon Group has made a firm commitment to electrify more than 30% of its fleet by 2030. You could make a pledge to reduce your overall energy consumption by replacing your CFLs with LEDs, which will also help you reduce air conditioning costs, as CFLs emit more heat than LEDs.
- Choose an ESG reporting framework. It’s pointless to have a mission and a goal if you can’t have it measured and reported by a third party. There are numerous organisations in India that can assist in registering, maintaining and tracking your goals. Tenon has partnered with EcoVadis, a French organisation for this. This is the third year they’ve given us a rating, and we’ve gone from a 30% to a 60% rating. Getting to 90% is a journey; if we keep measuring, we can keep improving in small steps.
- Establish baselines and benchmarks. You won’t be able to meet ESG requirements in a single day; you’ll have to take small steps every week or month by creating baselines and benchmarks, whether it’s tracking your electricity spend, fleet size, how fuel-efficient it is, water consumption and so on.
- Put the plan into action. Tenon FM has teamed up with a non-profit group called Sankalptaru, through which we are now planting 100 trees for every new customer we sign up; this is a documented occurrence. We keep track of how well the trees develop and, as a result, how much carbon they remove in terms of creating a negative carbon footprint.
- Monitor, assess, report, and repeat. If you continue on this route, you’ll be well on your way to becoming an ESG-responsible enterprise.