In this article, titled “Let’s be clear: ESG is not ‘woke’ and it’s different than sustainability, Julia Binder, PhD, Director of IMD’s Center for Sustainable and Inclusive Business, gives a beautiful definitional difference between sustainability and ESG, and why this matters for business.

Per Dr. Binder

• ESG is primarily a risk management and investment framework that seeks to evaluate the financial risks that environmental, social, and governance factors pose for a company’s value. It adopts an “outside-in” perspective that is best described as an investor- and company-centric framework which seeks to de-risk portfolios and increase the economic resilience of a company. ESG is not about being “woke” or even doing good. It is a risk and investment management framework.
• Conversely, corporate sustainability adopts an “inside-out” perspective as it focuses on the impact a company has on the planet and society. The people- and planet-centric approach seeks to not only minimize harm, but to positively impact society and the environment.

Per this article by Barclays Bank, within the past 12 months, 21% of corporations surveyed cancelled contracts with their suppliers due to the supplier not meeting sustainability criteria.

The movement away from non-sustainable, to sustainable, vendors will accelerate as organizations become more demanding of their vendors in order to satisfy their own sustainability mandates.

A report from the CDP shows that less than 3% of suppliers surveyed have acceptable sustainability programs.  This creates tremendous opportunity for organizations that are certified sustainable, to take market share.

This article in Financial Management talks about businesses seeing that opportunity – to gain investor and customer loyalty, and also to attract talent, by becoming certified sustainable in order to differentiate from, and take market share from, their competitive peers.

We appreciate Construction Executive Magazine publishing the below article on how SMEs can use sustainability certification to differentiate, recover, and grow faster than their competitors.

Survival and success in the post Covid-19 ramp up will depend on an organization’s ability to cost-effectively differentiate from it’s competitors.  Sustainability certification is currently the best tool on the planet to do this.

https://www.constructionexec.com/article/covid-19-will-drive-smes-to-sustainability-certification

TruPayroll (https://www.trupayroll.com/ ), a relationship-driven, full service, payroll provider, located in Marco Island, Florida has continued its environmental sustainability commitment by renewing and extending its Edenark Group ISO 14001 sustainability certification through 2023.

The Edenark Group ISO 14001 is the world’s premier environmental sustainability certification program and allows SMEs (small to mid-sized enterprises) the ability to attain the world’s most popular environmental certification standard via a program designed and priced specifically for them.   Edenark Group also helps clients pursue carbon neutrality and ESG compliance, using the Edenark Group ISO 14001 as a foundation for long term compliance.

The program, which allows companies to progressively improve at a pace that works for their needs, helps the organization define how it interacts internally, externally, and with the environment.  It incorporates energy/waste/water, employee health and performance enhancement, community involvement, procurement and suppliers, compliance and regulations, emergency/security, and stakeholder engagement.  Benefits include creating a culture of continual improvement, stakeholder engagement, lower costs, higher revenues and profits, improved employee performance, and…… doing the right thing for the environment and current and future generations.

“I love helping people beyond my core corporate service.  We strive to have a positive impact on our clients’ personal lives, their businesses, and their community,” said Al Wagner, CEO of TruPayroll.  “This desire to help others is what caused me to become passionate about sustainability.  I want to be part of the global solution by making an impact in my community, for my family and my clients’ families.  The Edenark Group ISO 14001 program gives me that platform,” added Wagner.

“In 2022, while also rebuilding from the impact of the pandemic, our team was able to complete a number of projects, including cross training employees to reduce downtime and energy usage, reduced travel, programmable thermostats, digital invoices, elimination of plastic bottles, elimination of Styrofoam cups, and interacting with vendors and clients to suggest they become sustainable.  Further, the Green Team has an exciting list of projects scheduled for 2023,” added Wagner.

“Edenark Group has a wonderful relationship with TruPayroll and they are an example of what the world needs more of – an organization that produces a superior product, supports its current stakeholders, shows it cares about future generations via its commitment to sustainability certification, and makes more money due to its sustainability programs,” said David Goodman, CEO of Edenark Group.  “When an organization executes the Edenark Group ISO 14001 sustainability certification, as TruPayroll is doing, it not only benefits the environment, but it also benefits its own operation and its clients,” added Goodman.

TruPayroll  (https://www.trupayroll.com/  ) can be reached at +1.239.394.0358

Edenark Group (https://edenark.com ) can be reached at +1 561.512.2257

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5AM Global, LLC, d/b/a BREATHE!™ ( https://www.5AMGlobal.com/ ), a Nevada-based, strategic marketing and business management firm, which is producing the May 3-5, 2023 BREATHE!™ Convention, a WBCDMN (Web3, Blockchain, Crypto, Defi, Metaverse and NFT) convention that is committed to connecting the Web3 Universe, has decided to pursue the Edenark Group ISO 14001 environmental sustainability certification program.

The Edenark Group ISO 14001 is the world’s premier environmental sustainability certification program and allows SMEs (small to mid-sized enterprises) the ability to attain the world’s most popular environmental certification standard via a program designed and priced specifically for them. Edenark Group also helps clients pursue carbon neutrality and ESG compliance, using the Edenark Group ISO 14001 as a foundation for long-term compliance.

The program, which allows companies to progressively improve at a pace that works for their needs, helps the organization define how it interacts internally, externally, and with the environment.  It incorporates energy/waste/water, employee health and performance enhancement, community involvement, procurement and suppliers, compliance and regulations, emergency/security, and stakeholder engagement.  Benefits include creating a culture of continual improvement, stakeholder engagement, lower costs, higher revenues and profits, improved employee performance, and…… doing the right thing for the environment.

Shawn Willis, Founder & CEO of 5AM Global/BREATHE! Convention states “When I first read this quote: ‘The true meaning of life is to plant trees, under whose shade you do not expect to sit,‘ I immediately understood that whether personal or business, we all must understand the importance of making an impact. One way to do this in business is to lead with sustainable practices that help our environment, society, and economy. The company culture and processes of 5AM Global and its production of BREATHE! Convention are built around solutions to reduce waste, manage risk, personal and professional development, and philanthropy for our employees, clients, and strategic partners. The Edenark Group ISO 14001 Sustainability Certification will both help to hold us more accountable and help to inspire, motivate, and set a standard for other companies who aspire to take the same steps.”

“When an organization pursues, and attains, the Edenark Group ISO 14001 sustainability certification, they are not just doing it to see their costs go down and revenues and profits go up. They are setting a higher bar for their organization and sending a signal to all those around them,” says David Goodman, CEO of Edenark Group. “They are agreeing to adhere to the world’s gold standard for sustainability certification; are choosing to be a leader and part of the solution, not the problem; and are joining an elite fraternity of over 300,000 organizations, in over 150 countries, that have committed to continually improve in every way.”

5AM Global LLC d/b/a BREATHE!™ (https://www.5AMGlobal.com/ ) can be reached at +1 833.931.3128

Edenark Group (https://edenark.com ) can be reached at +1 561.512.2257

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Per this article in Forbes, although it is expected that at least ten companies will incur at least $5 million in greenwashing fines, there appears to be movement towards positive environmental impact.

A few key points:

• Better ESG data programs will be created and used
• 80% of large companies will start capturing and reporting their own carbon emissions (up from 50% currently). This is going to impact their demands on vendors (see below).
• Scope 3 reporting (ie, your company needing to report carbon emissions to your clients) will increase as 67% of organizations intend to require vendor reporting
• Let’s say that one again – If you are a vendor to a larger company, or a vendor to a vendor, there is a 67% chance they are going to require you to start reporting your carbon emissions
• Travel will remain soft, driven by sustainability requirements
• Public companies will incorporate goals that drive sustainability behavior (putting more pressure on their vendors who are not sustainable)
• Companies that are sustainable will be better able to address global regulations and have a decided competitive advantage
• The current climate-related trend is expected to continue for at least 20 years, as implementation of programs will take that long. So, this is not a seasonal trend that is going away.
• Within 3 years, 45% of the G2000 (the 2000 largest companies in the world) will have fully integrated sustainable supply chains
• Let’s say this one again – If you are serving one of the 2000 largest companies in the world, or serving a vendor of same, there is an almost 50% chance that within the next three years, to retain their account, you will need to become certified sustainable

The acceleration of global action over the past 36 months has been stunning.  It is quite possible that many of the above timelines will be shortened.

This week, we covered a lot of ground – 

First, we looked at consumer preferences – Consumers are abandoning non-sustainable companies.  The cost of becoming environmentally certified sustainable is less than the cost of losing clients.

Second, we looked at how your advertising is working, or not working – Consumers don’t want to hear about your brand, they want to hear about your sustainability commitment.  The cost of becoming certified sustainable is probably less than what you are spending on advertising, and it would make your advertising far more powerful.

Third, we looked at your ability to hire and retain talent – Certified sustainable companies are paying less to hire and retain talent.  The cost of becoming certified sustainable is less than the cost of a single lost hire, or employee that quits.

Fourth, we looked at your corporate clients.  They are going to demand you become certified sustainable.  Think about who wins the bid when one of you is certified sustainable.

Fifth, we looked at the lenders – Cost of money will be higher for non-certified sustainable companies as lenders have attached higher risk to non-certified companies.  The cost of becoming certified sustainable is less than the interest rate differential you are going to see.

And finally, we looked at government regulations – By the end of this year, governments (including over 50) controlling +50% of the world’s economy will have sustainability carbon emissions regulations in place.  The question is when, not if.

We did not spend time on the fact that becoming environmentally certified sustainable is the right thing to do for the environment and future generations.  That should be reason enough. 

If interested in learning more, this PPP provides suggestions on what to consider when thinking about sustainability.     

This article talks about 10 trends to watch on the Environmental side of ESG.

For SMEs (small to mid-sized enterprises), these are the five of greatest importance:

• Increased supply chain efforts – There will be more downward pressure from your large clients, demanding you become sustainable in order for them to meet their mandates

• Focus on Private Company Emissions – There will be more interest and attention paid to private company emissions. This ties back to the first point, where your bigger clients are mandated to demand you develop your sustainability program.

• Standardization of Reporting – Again, tied to the above two points, you will need to use a globally-accepted program for your sustainability certification and reporting of emission data.

• A Broader Climate Lens – Consumers (B2C and B2B) using their purchasing decisions to show their demands and reward SMEs that can prove they are sustainable and have an emissions plan.

• Environmental Concerns Translate to Risk – For SMEs that delay becoming certified sustainable, risks will be greater – higher cost of money; government policy changes could negatively impact the ability to operate and compete; consumer demands will become harder to ignore; and investors will become less willing to fund.

Per this article, an Oracle study produced the following, which is consistent with other studies we have seen:

• 70% of consumers will abandon brands that do not take sustainability seriously
• 87% of consumes will pay a premium for products from companies that demonstrate environmental and social progress
• 78% are frustrated with the progress businesses are making with sustainability

When you combine the frustration with lack of progress, the willingness to abandon existing brands, and the willingness to pay more for a sustainable company, it is no wonder why certified sustainable companies are growing up to 20x faster than their non-certified peers.

Per this article in Bloomberg Tax, the EU actions, such as the Corporate Sustainability Reporting Directive (CSRD), may soon expose US and other non-EU multinational corporations to a novel type of tax reporting.

In short, since the 28 November 2022 CSRD, many believe reporting will start with the 2024 fiscal tax year.

Here is the crucial passage, with bold on the key words:

“The topic of tax compliance as an element of MS stands out, in that it is [not] considered … by CSRD. Nevertheless, the identification of procedures that are relevant and adequate for establishing compliance with the MS can follow the analytical process proposed for human rights and corruption, by considering OECD MNE Guidelines, which holds two key [tax] expectations for undertakings:

“(a) Undertakings should comply with the letter and the spirit of tax laws and regulations of the countries in which they operate. Complying with the spirit of the law is defined as “discerning and following the intention of the legislature”, which in turn is supposed to guide the determination of the tax amount legally required. (OECD MNE Guidelines, XI.1.)

“The first expectation is focused on the end-goal or performance of undertaking, for example avoiding and addressing negative impacts on society. The second [on governance] focuses on the means to achieve that end, for example policies and processes to embed tax compliance throughout an undertaking.”

The ‘spirit of the law’ is the issue.

What does this mean for you?  If you are a non-EU organization operating in the EU, you are out of time.  You need to have a sustainability program in place in the coming months and begin work on your ESG program.  This is going to be far more painful for organizations that are not sustainable and do not have an ESG program in place or well into development.