In a world that is getting measurably hotter and includes more extreme weather events–from hurricanes to wildfires—the threat of climate change is now our reality. Amidst a global pandemic and a long overdue social justice reckoning, it’s no longer possible to “mind our own business,” nor is it prudent or ethical.
That’s why we want to talk about the concept defined by the categories of Environmental, Social, and Governance, more commonly known as “ESG.”
ESG Defined
So, what exactly is ESG?
ESG refers to the three central factors in measuring the sustainability and societal impact of a company or business. It literally stands for “Environmental,” “Social,” “Governance,” with each leg of the stool supporting a self-aware and transparent ethos for conducting business responsibly and prosperously in the 21st century. In a business world guided by ESG principles, “responsibly” and “prosperously” are no longer at odds, but rather necessarily entwined.
Let’s take a closer look at each of the pillars of ESG:
E is for environmental
In ESG, the environmental component refers to factors that determine a company’s impact on the earth, in both positive and negative ways. These factors include:
- Usage of renewable energy including wind and solar
- Carbon footprint and carbon intensity (pollution and emissions)
- Greenhouse gas emissions goals
- Climate change policies, plans, and disclosures
- Recycling and safe disposal practices
- Water-related issues and goals
S is for social
The social component of ESG consists of people-related elements like company culture and issues that impact employees, customers, consumers, and suppliers – both within the company and in greater society. Social parameters include:
- Mission or higher purpose of the business (or lack thereof)
- Ethical supply chain sourcing
- Employee treatment, pay, benefits, and perks
- Diversity and inclusion in hiring and in advancement opportunities
- Employee safety policies including sexual harassment prevention
- Public stance on social justice issues, as well as lobbying efforts
G is for corporate governance
Finally, we come to governance, i.e., those items relating to corporate governance and behavior, such as board quality and effectiveness. Key governance topics include:
- Compensation tied to metrics that drive long-term business value, not short-term share price targets
- Diversity of the board of directors and management team
- Whether a company has a classified board of directors
- Whether chairman and CEO roles are separate
- Transparency in communicating with shareholders, and history of lawsuits brought by shareholders
- Executive compensation, bonuses, and perks
Why ESG Matters
ESG is big concept. It’s meant to be a “comprehensive” framework, a 360-degree view of a business and its behaviors and impacts that can continue to grow and evolve with the times. Could other bullets be added to the lists above? Yes, and that’s the point.
In a recent poll of thousands of institutional investors around the world, over 50% of institutional investors agreed that companies with better ESG track records generate better investment returns.
Put another way, the world is watching – and that world includes investors, supply chain partners, customers, and employees. And these stakeholders care.
Why ESG Matters to Us
At Convergent Energy + Power, we echo the growing enthusiasm from both consumers and investors for ESG. We find ESG to be a useful framework to guide business operations – and improve them – while also making it easier for stakeholders to evaluate and compare business performance and potential growth.
As the most dependable provider of energy storage solutions in North America, we are committed to helping our customers reduce their electricity costs and carbon footprint at the same time. And we are committed to being part of the clean energy transition and future of energy, which requires energy storage.
ESG at Convergent Energy + Power
At Convergent, ESG is baked into our mission, our vision, our hiring process, our company culture, and our operations.
To ensure we’re “walking the talk,” we engaged Sustainalytics, a Morningstar company and leading, independent ESG rating agency, to evaluate our ESG performance.
Sustainalytics rates companies based on their preparedness, disclosure, and performance, as well as the likelihood of potential ESG controversies, assigning them a number – on a scale of 0 to 100. Companies are also rated against global industry peers. The lower the score, the lower the company’s perceived ESG risk.
Now for the good news. We did great!
Convergent received a Sustainalytics score of 13.9 out of 100, placing us squarely in the “low risk” category of companies. For context, a score under 10 is considered “negligible risk,” while a score over 40 is considered “severe risk.”
Of 597 companies in the utilities sector rated by Sustainalytics, Convergent has the eighth lowest risk. Of 71 companies in the renewable power production sector, Convergent came in fifth. Additionally, Convergent has had no events that may negatively impact stakeholders, the environment, or the company’s operations.
One Small Step for Convergent, One Large Step for … Our Customers
Obviously, we love that we got a low score. It means we are doing many things right – right for people and the planet. But we know we can always do more. This is the start of something, not the end.
Delivering on our promises to all of our stakeholders—internal and external—may not be directly captured by Sustainalytics but is how we rate ourselves.
We’re proud to be part of the future of energy, the clean energy transition, and helping customers of all types, including Shell New Energies, reduce their electricity costs by millions of dollars while improving grid sustainability and reliability.
There has never been a more critical time to be part of the solution.
ESG and Your Organization
Please email us if you’d like to learn more about reducing your organization’s carbon footprint and electricity costs with energy storage or Convergent’s commitment to ESG performance: info@convergentep.com.