The impacts of consumer demand on our planet are more apparent than ever, evidenced by dwindling natural resources and environmental pollution. Yet, capitalism isn’t beyond redemption. Companies that adopt an environmental, social and governance approach (ESG) are finding ways to do business that are healthy for their bottom lines and the planet, as Fortune 500 companies like HP are learning.
ESG frameworks provide a way of measuring the social good that companies do beyond maximizing profits on behalf of shareholders and standards gauge a company’s socially conscious behavior. The environmental part of that looks at steps that companies take to safeguard the environment, such as corporate climate change policies, careful energy usage, and the conservation of natural resources. The social component of ESG relates to how companies manage relationships with people, organizations and communities with which they do business. Finally, the governance part of ESG addresses ethical leadership and includes taking measures to ensure transparency, diversity, and accountability from the top down.
For conscious consumers, companies that embrace ESG provide a more appealing alternative to those that put profits alone front and center. Many investors too are opting for companies with a focus on ESG, making it increasingly profitable for companies to do good. For example, brokerage firms, investment advisors, mutual funds, and even public pension funds now commonly offer investment opportunities in companies that employ ESG standards — often through so-called “green funds” or “sustainable investments.”
That’s smart business on their part too, as ESG standards can prevent investment losses from unethical practices on companies’ part. A survey of Investopedia and Treehugger readers revealed that interest in ESG continued to grow in 2020, with nearly a fifth of respondents incorporating ESG standards into their investment strategy, and 67 percent saying they planned to invest in more companies that use the ESG framework.
Logistics companies, especially those focused on hyperlocal delivery, batching and fulfillment are in an opportune position to easily embrace ESG criteria and support the business community with their efforts. How? The answer is by increasing efficiencies around deliveries.
By grouping goods going to the same neighborhoods together and delivering them from micro-warehouses near dense metropolitan hubs in smaller vehicles, companies can reduce the distance that goods travel in large, gas-guzzling trucks and the total miles driven to get their goods to consumers. That strategy makes good business sense, as it lowers the cost of deliveries and speeds up delivery time, resulting in happier customers. But it also means companies are using less fuel, and creating less carbon emissions.
Even better, short-delivery routes and smaller deliveries offer the opportunity to use small, energy-efficient vehicles such as electric cars and trikes. Reducing emissions is a goal almost everyone can get on board with; after all, most people who live in or have visited large cities are well acquainted with the problem of tailpipe emissions.
Working with fuel economy specialists to monitor carbon footprint and track environmental compliance, and using platforms that allow for detailed and accurate carbon dioxide emissions accounting can help companies not just move in the right direction, but track their progress towards specific ESG goals. Remember, you need to be able to measure it in order to manage it. Doing that also demonstrates a level of transparency and accountability that conscious consumers and investors are likely to value highly.
But let’s not confine the conversation to consumers and investors, because there’s a much larger conversation to be had here, too. The United States ranks lower than most developed economies in emissions, renewable energy, and climate policy. Sustainable investing is vital to sustainable growth. Both private investors and the government have all become increasingly focused on funding and supporting sustainable solutions and climate-supportive actions, such as through electric mobility programs, charging stations, and sustainable food and clothing initiatives. Such moves have made the path forward less challenging for the entire delivery ecosystem.
So now, it’s a question of what we do with it. ESG must become part of companies’ DNA, not because we know the business benefits of ESG — facilitating long-term growth, attracting great talent, reducing costs, and building a sense of trust among stakeholders — but because it’s the right thing to do. Business leaders — and all of capitalism — find themselves at a critical choice point: evolve or face possible collapse under our own weight. We have the incentive, the knowledge, and the technology to embrace ESG in hyperlocal fulfillment, and to lead the way in sustainable business and growth.
Nancy Korayim is founder and CEO of MetroSpeedy.
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