ESG Explained: What’s the “E” in ESG?

Over the last few years, Environmental, Social and Corporate Governance (ESG) has become an industry buzzword, but what exactly does that mean for your company? The environmental pillar of ESG is concerned with a company’s energy consumption, waste generation, emissions, and usage of natural resources. A common misconception is that business will inevitably suffer for environmental practices to prosper. Investing in and integrating environmentally friendly practices into your business will make it more efficient and cost-saving in the long run. The E in ESG considers the entire picture of how a company interacts with and impacts the environment. ESG provides a framework for minimizing that impact in ways that benefit the environment and the company.

Top hot-button issues for all industries are polyfluoroalkyl substances (PFAs) and climate change. Moving forward, the management and reduction of PFAs will be an important facet of ESG planning because regulations on PFAs will continue to increase in scope. The longevity of these chemicals poses a threat to the environment, and ESG strategies offer an opportunity to comply with regulations and keep these harmful chemicals out of the environment. The Securities and Exchange Commission (SEC) in the U.S. continues to place an increasing emphasis on publicly-traded companies to manage and report on financial risks pertaining to climate change. The European Union (EU) is also implementing several new reporting requirements related to climate risks. The SEC and EU requirements directly impact publicly-traded companies and indirectly impact suppliers to publicly-traded companies in all industries.

Capaccio specializes in helping businesses meet ESG goals by addressing the nuanced demands of their industry. Below, we break down what the E in ESG means to a select group of industries serviced by Capaccio: BioPharma, MedTech, Semiconductor, and General Manufacturing.

BioPharma

The BioPharma industry is undergoing significant changes post-pandemic, particularly as the rate of pharmaceutical research and development has accelerated. As the industry expands, it is now the optimal time to implement ESG strategies and grow BioPharma sustainably. Risk identification is a key step on the road to creating ESG targets. To comply with environmental regulations, BioPharma businesses need to address their chemical usage and waste disposal methods. Especially as the rate of production increases, proper waste disposal methods will be essential for the safety of workers and the environment. Through the proactive implementation of waste minimization planning, companies can reduce costs and comply with waste management requirements. Air quality is another key area for implementing ESG strategies for BioPharma. Reducing the emission of hazardous air pollutants and volatile organic compounds is a critical part of BioPharma ESG strategy. Improved air quality and waste management clearly benefits the environment, but risk mitigation measures will also improve the efficiency of business operations and lead to positive outcomes for communities too.

MedTech

A recent MassMedic survey found that out of roughly 350 participating companies, 35% considered ESG a pillar of their mission statement. Additionally, 47% have discussed ESG though have not yet developed an implementation strategy. These figures suggest that a strong interest in ESG is growing within the MedTech industry, which has also prompted MassMedic to plan an ESG Work Group to strategize the best path forward. Much of the environmental impact of the MedTech industry stems from waste generation and usage of chemicals and water. In practice, the implementation of an ESG strategy reduces chemical and water usage, which not only benefits the environment but also decreases costs. The ESG approach also considers the efficiency of MedTech supply chain operations and how best to collaborate with suppliers to achieve ESG goals. By understanding the entire lifecycle of your product, you increase your capacity for risk mitigation and create safer working conditions.

Semiconductor

The global demand for semiconductors continues to rise, and ESG will play an integral role in the industry’s future. The semiconductor industry faces the unique challenge of handling heightened risks associated with certain chemicals and gases. The implementation of pollution prevention planning helps mitigate the risks associated with chemical hazards and also ensures that these materials are not emitted into the environment. Like the other industries, the semiconductor industry must also concentrate on process water management and reduction, which will benefit both the business and the environment.

General Manufacturing

As ESG expands, the expectation that the general manufacturing industry adopts sustainability goals has also grown. In the same MassMedic survey referenced above, 68% of companies said they would approve or not approve a supplier based on their eco-footprint. There is currently high customer demand in the manufacturing industry for conformance with ESG reporting standards such as the GRI (Global Reporting Initiative) and SASB (Sustainability Accounting Standards Board) standards. ESG initiatives for the manufacturing industry can take many forms, especially as manufacturing covers such a wide range of applications – from plastics to food processing. Efficiency in the supply chain is crucial to building good relationships with customers, while also minimizing environmental impacts by decreasing emissions, energy use, and waste generation. Ethical consumerism demands transparency in supply chain operations, which encourages manufacturers to identify and implement ESG strategies.

How Can Capaccio Help?

Capaccio has more than 30 years of experience working within the BioPharma, MedTech, Semiconductor, and General Manufacturing industries. As the demand for ESG initiatives grows, Capaccio is ready to help these industries continue to meet the needs of the present. The environmental pillar offers ways to reduce costs, improve efficiency, and create safer working environments. Capaccio assists clients in developing an ESG roadmap that considers how to best implement environmentally friendly practices. Starting with a materiality assessment, Capaccio identifies issues and establishes target metrics that comply with ESG goals. We have developed the EHS-Dashboard™  to make it easy to track ESG metrics which can be reported up to Corporate. Schedule a demo to find out more about the EHS-Dashboard™.  We help our clients implement ESG programs, monitor their progress, and demonstrate results that reflect a symbiotic relationship between their company and the environment. We live our mission of helping industry and the environment prosper.