By Jim Noble, Global Director of Insurance and Head of The Americas, Greater Than
October 25, 2023
Sustainability management has never been such a top business priority as it is now. There are many reasons for this, including recent key developments in Environmental, Social and Governance (ESG) reporting, increasing customer demand for sustainable products and services, and a growing stakeholder/investor focus on climate-conscious businesses. This is all set against a backdrop of the United Nations’ Sustainable Development Goals that call for global action to protect the planet.
For many companies, sustainability has, until now, fallen into the ‘nice to have’ category. Today, it has become an integral part of doing business. Companies that do not prioritize sustainability and that are not transparent and open about their climate impact, will likely eventually suffer negative consequences and could even find themselves pushed out of the market. Within the fleet management industry, the focus is now on:
- Transparency – being honest and open about risks and intent
- Data – to support claims, facilitate reporting, and demonstrate climate impact efforts
- Pride – taking ownership of sustainability and being proud to contribute to climate action
Yet, there is confusion around what managing sustainability entails, and what companies are required to do. Of course, it’s important to note that sustainability isn’t just about legal obligations; it’s very much about ‘doing the right thing’.
What exactly does ESG mean?
ESG stands for Environmental, Social and Governance:
- Environment includes everything connected with an organization’s environmental impact, including transport, energy usage, and carbon emissions.
- Social refers to an organization’s wider societal impact, incorporating factors such as employee well-being, company culture, and community involvement.
- Governance refers to how the business operates, including policies, reporting, transparency, and accountability.
In the same way that financial KPIs might be used to measure a company’s performance, ESG looks at how a company performs in terms of environmental and social matters.
What is ESG reporting?
With so much uncertainty around legislation and requirements, many companies remain in the dark about ESG reporting. For smaller companies in particular, the term “ESG” might not feel relevant. But, with investors and customers alike paying close attention to the ESG efforts of businesses, there’s a lot at stake.
ESG legislation is quite complex as it varies between countries and industries. And, while the EU is currently leading the way in ESG legislation, it is still very relevant elsewhere, including in the United States. While there are no comprehensive Federal rules around ESG, at least 22 states in the US have adopted some form of ESG legislation that mostly requires a listing of ESG risks and mitigation efforts. Although it’s also interesting to note that 18 states have adopted “anti-ESG” laws, confusing the regulatory landscape further.
ESG legislation is there to make businesses accountable for their activities and to reduce climate impact. It also provides investors and stakeholders with useful information to help them evaluate investment risks from a sustainability perspective. Overall, ESG legislation helps to create a culture of transparency around business activities.
What sustainability information do I need to record and/ or report?
While specific regulations include different criteria, ESG is largely focused on increasing transparency around:
- Emissions data, which might include Scope 1, 2, and/or 3
- Risk management
- Targets to reduce collisions and emissions
- Negative impacts on sustainability – and how you plan to manage them
- Ongoing environmental performance
But, as mentioned above, it’s not only about meeting legislation; it’s about doing the right thing. The more transparent your organization can be about its impact on society and the planet, and the more it does to reduce this impact, the better.
Benefits of managing sustainability
There are many benefits to evaluating your focus on sustainability and ESG. While your company might not be legally required to report its activities, transparency can deliver many business benefits, as well as new opportunities. These include:
- Employee satisfaction
Protecting the planet is important to people, including your employees. Demonstrating your commitment to a sustainable future and enabling your employees to own the ‘human factor’ on CO2 emissions from driving, is empowering.
- Customer demand
The same principle applies. Consumers are increasingly looking to buy from sustainable companies so it makes business sense to be open and transparent about your commitment to the planet.
- Investor satisfaction
Investors are in a powerful position to influence change and are more aware than ever of the need to be associated with organizations that are genuinely sustainable. Transparency about climate and societal impact (including road safety performance) is likely to be high on the checklist for most investors and may be required by legislation.
- Competitive advantage
Creating a brand image that prioritizes sustainability is a good way to earn trust from all stakeholders, including those listed above, as well as potential new business partners. Some of the recent ESG-related legislation requires companies to consider sustainability throughout the supply chain, so climate impact transparency could give you a competitive advantage when it comes to partnerships, ecosystems, and tender processes.
- Financial performance
Reducing transport-related climate impact can have a positive impact financially. For example, influencing more sustainable driving behaviors will result in fuel savings, as well as human factor CO2 savings. And, an eco-friendlier driving style is likely to reduce vehicle wear and tear, helping to minimize maintenance costs and prolong vehicle life. For fleets with EVs, eco-friendly driving can result in more mileage from each charge, minimizing charging frequency.
How do I measure and report on sustainability/ESG?
The biggest challenge is accessing harmonized data, but at Greater Than we make that simple. When you share GPS driving data with us via a simple API connection, we convert it into climate impact insights including human factor CO2 savings in grams and percentage.
An added advantage is that by measuring drivers’ individual climate impact, you can quickly identify those in need of training and support and – as part of a driver safety/sustainability program – you can automate feedback to drivers to help them reduce their climate impact.
Because the converted climate impact data is agnostic, it is comparable regardless of vehicle type, fuel type, and location. We can even harmonize data from different telematics solutions, making it easy to measure and report on climate impact, including Scope 1, 2, and 3 emissions. The resulting data can be used to help your company elevate its position as a sustainable organization, reduce your climate impact, and fulfil – and exceed – reporting regulations.
To discuss your sustainability strategy or find out about Greater Than’s ESG reporting solutions visit www.greaterthan.eu.