When my co-founders and I started Beewise with the goal of reversing the global honey bee colony loss crisis and thereby securing the global food supply, we made sure that our mission was intrinsically linked to our business model. Because for every dollar we make, we save at least two bees, allowing us to stay hyper focused on our mission. This approach of “doing well by doing good” makes reflecting on our environmental, social, and governance impact even more meaningful.
Recently, we completed our first ever ESG report, which was an exercise that helped us focus not just on what we have been doing well to date, but where we can be doing more to impact climate, hunger, life on land, industry and innovation, and economic growth—categories tied to the United Nations’ Sustainable Development Goals.
This exercise made me want to not only open a dialogue with the food and environmental sustainability community, but also to set an example for other PE-backed companies who might feel that ESG is an area where they lack expertise or that it is not a justifiable use of their precious capital.
The current volatility in the market has left many companies scrambling to find ways to cut costs and increase profitability. Unfortunately, one of the first things to go is often a company’s commitment to environmental, social, and governance (ESG) initiatives. However, cutting ESG initiatives is short-sighted and can have negative long-term consequences for both the company and society at large.
Here are a few reasons why I believe companies should not cut all their ESG initiatives during turbulent times:
- ESG initiatives can actually save money in the long run. Many companies think of ESG initiatives as a cost center rather than a potential source of savings. However, initiatives like reducing energy usage, improving supply chain transparency, and reducing waste can all lead to cost savings over time. In fact, a 2019 report from McKinsey & Company found that companies with strong ESG performance had a lower cost of capital, were more resilient during economic downturns, and had higher profitability over the long term.
- Cutting ESG initiatives can damage a company’s reputation. In today’s socially conscious world, consumers and investors alike are paying close attention to a company’s ESG practices. Cutting these initiatives sends a message that the company is not committed to doing its part to create a more sustainable and equitable world. This can lead to a loss of customer loyalty and investor confidence, both of which can have significant financial consequences.
- ESG initiatives can help companies weather future crises. The recent financial downturn is just one example of the many crises that companies will face in the coming years. Climate change, social unrest, and geopolitical instability are all potential threats to business operations. Investing in ESG initiatives can help companies build resilience and prepare for these challenges.
- ESG initiatives are essential for addressing the world’s most pressing challenges. The challenges facing the world today, from climate change to income inequality, require collective action from businesses, governments, and individuals. Companies have a unique role to play in addressing these challenges, and cutting ESG initiatives undermines that role. By continuing to invest in ESG initiatives, companies can help create a more sustainable and equitable world for all.
- ESG initiatives can attract and retain top talent. Today’s workers, particularly the younger generations, are increasingly looking for companies that align with their values. By prioritizing ESG initiatives, companies can attract and retain top talent that is committed to creating a better world. This can help ensure the long-term success of the company.
Of course, in an environment where it is critical to preserve runway, it’s important to make sure that the ESG initiatives that you prioritize have a high return on investment. Measuring the impact of ESG (environmental, social, and governance) initiatives is an important step for companies committed to sustainable and responsible business practices. Here are a few ways to measure the impact of ESG initiatives:
- Set clear goals and metrics: Before implementing ESG initiatives, companies should set clear goals and metrics to measure the impact of their efforts. These goals should be specific, measurable, and time bound. For example, a company might set a goal of reducing greenhouse gas emissions by 20% by 2025.
- Collect and analyze data: To measure the impact of ESG initiatives, companies need to collect and analyze relevant data. This might include data on energy usage, waste reduction, employee satisfaction, community engagement, and more. Companies should invest in data management systems and tools to help them collect and analyze this data effectively.
- Conduct stakeholder engagement: Measuring the impact of ESG initiatives requires input from a variety of stakeholders, including employees, customers, investors, and community members. Companies should engage with these stakeholders regularly to gather feedback on their ESG efforts and to identify areas for improvement.
- Use industry benchmarks: Companies can use industry benchmarks to compare their ESG performance to that of their peers. This can help them identify areas where they are doing well and areas where they need to improve.
- Report on ESG performance: Finally, companies should report on their ESG performance regularly. This might include an annual sustainability report or other types of disclosures. By reporting on their ESG performance, companies can hold themselves accountable for their commitments and demonstrate their commitment to sustainable and responsible business practices.
In conclusion, cutting down on ESG initiatives in a volatile market is a shortsighted decision that can have negative consequences for the company, society, and the planet. Instead, companies should view ESG initiatives as a strategic investment that can lead to cost savings, protect the company’s reputation, build resilience, address pressing challenges, and attract top talent. It’s even easier to stay committed to ESG initiatives when they are well-aligned with your company’s business model, and by focusing on this alignment, companies can help build a more sustainable and equitable world for all. At Beewise, we believe our ESG initiatives will indeed sweeten the world!