There’s one buzzword you’ll likely hear in the energy, food and beverage, and manufacturing industries: ESG compliance. ESG stands for the environmental, social, and governance framework, which helps companies and investors analyze business practices and performance regarding ethical and sustainability issues. The framework also offers a way for companies and investors to assess business risks and opportunities regarding environmental, social, and governance factors.

While a buzzword, ESG compliance is a goal many companies are striving to hit, which is why most businesses have ESG programs. In fact, research indicates that over 90% of S&P 500 companies and around 70% of Russell 1000 companies publish ESG reports in some form. Additionally, as of 2020, 79% of venture and private equity-backed businesses have ESG initiatives. Because the ESG framework has become so prevalent, some organizations even want to mandate companies to report on ESG factors.

The increasing importance of ESG

In the U.S., the Securities and Exchange Commission (SEC) is determining whether to create new rules to require companies to provide more detailed reports on their greenhouse-gas emissions and climate-related risks. The SEC is also considering additional regulations on other factors of ESG.

Maybe you already know this information because your business has an ESG program or you consult businesses with ESG initiatives. In either case, you may frequently wonder how to achieve ESG compliance. The good news is that you’re not alone— ESG scoring guidelines can differ across the energy, food and beverage, and manufacturing industries, and knowing how to measure the success of an ESG program is not straightforward.

However, there are four r-letter words that you can consider when striving for ESG compliance. But before revealing those four R’s, it’s critical to remember why complying with ESG is important and what it actually looks like to comply.

The Value of ESG Compliance

The value of ESG standards stem from all the pros associated with it. Regarding investments alone, numbers are high. The money pouring into sustainable funds increased from $5 billion in 2018 to over $50 billion in 2020. That number rose again in 2021 to almost $70 billion. The momentum continued in 2022, with funds gaining $87 billion in new money in the first quarter of the year and $33 billion in the second quarter.

On top of the investments that companies can receive from achieving ESG compliance, many other benefits exist when businesses align with the ESG framework, including the following:

• Keeps consumers happy: According to PwC, 76% of consumers will end their relationship with businesses that treat employees, the environment, or their community poorly.

• Boosts employee satisfaction: Companies with the highest employee satisfaction also have ESG scores that were 14% higher than the global average.

• Unlocks financial opportunities: Implementing the U.N.’s Sustainable Development Goals (SDGs), the leading ESG framework for big companies, can provide $12 trillion in economic opportunities by 2030 and generate 380 million jobs.

• Increases revenue: Regarding the 500 largest U.S. companies, 53% of their revenues come from business practices that support SDGs. For the 1,200 largest global companies, 49% of their revenues come from the same thing.

• Decreases business expenses: When companies prioritize ESG compliance, they experience lower operating, organization, and energy costs.

• Enhances customer loyalty: Research indicates that 88% of consumers will be more loyal to a business that supports environmental and social issues.

Clearly, while complying with ESG may not be straightforward, the benefits of having a successful program outweigh any initial confusion. But now it’s time to address what ESG compliance looks like so that it is easier to guide an ESG program successfully.

What is ESG compliance?

ESG compliance refers to the standards and guidelines companies implement that are mandated by regulatory bodies. These standards are what business executives and investors can use to determine how well a company is doing in environmental, social, and governance areas. For businesses to achieve ESG compliance, they must have criteria in three dimensions.

1. Environmental

Environmental criteria refer to a company’s impact on the environment and the potential risks and opportunities it faces because of issues like climate change and natural resource protection.

Common examples of criteria that help companies comply with the environmental aspect of ESG are the following:

• Waste management

• Carbon footprint

• Biodiversity loss

• Depletion of natural resources such as water

• Deforestation

2. Social

Social criteria refer to how companies treat people, including employees, customers, suppliers, stakeholders, and community members. The standards in this area focus on addressing a company’s relationships and impact on others. Examples of criteria that help businesses comply with the social dimension of ESG include the following:

• Employee engagement and satisfaction

• Fair pay for workers

• Data protection and privacy policies

• Workplace safety and health

• Customer satisfaction levels

• Fair treatment of suppliers and customers

• Support of labor standards and human rights

• Projects to support and fund institutions helping underserved and poor communities

3. Governance

Governance criteria address how a company is managed and led and how those factors create positive changes. The guidelines in this area focus on industry best practices, corporate policies, and methods that help companies comply with regulations. Common examples of criteria that help brands adhere to the governance aspect of ESG are the following:

• Financial transparency

• Diversity and structure in board composition

• Business integrity

• Ethical business practices

• Diversity, equity, and inclusion in the workplace

• Risk management standards

• Regulatory compliance practices

• Rules to prevent bribery, corruption, and conflicts of interest

• Guidelines on lobbying and political donations

Four R’s to Achieve ESG Compliance

The identified criteria above are a great foundation for companies that want to achieve ESG compliance. Ideally, businesses should have criteria in every area of ESG to ensure they are compliant.

However, when it comes to the environmental aspect in particular, there are four R’s that companies should consider when striving to comply with the ESG framework: reduce, water reuse, water recycling, and water reclamation.

These four r-letter words are the most important to implement because they take into account the common environmental criteria for ESG, like waste management, depletion of natural resources, and companies’ carbon footprint. Therefore, if businesses want to ensure ESG compliance in the environmental area, here’s more insight into why they should implement the four R’s.

1. Reduce

This practice focuses on reducing the dosage requirements of companies’ particular water treatment processes. While this can be a contentious point, reducing dosages not only improves the environment but it also helps companies reduce their operating costs.

2. Water Reuse

Water scarcity is a significant water trend, with research suggesting that two-thirds of the world’s population could face water shortages by 2025. For companies and communities that want to make a positive impact on the environment, reusing water can go a long way.

With this practice, companies can reclaim water from various sources before treating and reusing it for beneficial purposes like industrial processes, agriculture and irrigation, groundwater replenishment, and more.

3. Water Recycling

Water recycling focuses on businesses using wastewater and treating it so that it can be reused safely. By recycling water, companies can help improve water quality, enhance local water supplies, save energy and money, and decrease disposal and discharge costs of wastewater.

4. Water Reclamation

Along the same lines as water reuse and water recycling is water reclamation. This practice focuses on collecting water from numerous sources before treating it to reuse it for various purposes like environmental restoration, industrial processes, groundwater replenishment, and irrigation. This tactic also has the ability to increase water supplies, improve sustainability, and enhance water resilience.

Implementing the Four R’s

Making reduction, water reuse, water recycling, and water reclamation a core part of a company’s foundation isn’t incredibly difficult, but it does take skill and knowledge. If businesses want to implement the four R’s to achieve ESG compliance, they need to work with experts who know the correct steps to take.

As wastewater and water treatment experts, our team at Genesis Water Technologies has demonstrated experience and knowledge to help companies seamlessly incorporate the four R’s into their business practices to comply with the ESG framework. Additionally, we use advanced and innovative methods to help businesses reach their goal of ESG compliance, ensuring a smooth, cost-effective process.

For businesses that want to get in touch to achieve ESG compliance, contact our team at Genesis Water Technologies at +1 877 267 3699 or via email at customersupport@genesiswatertech.com. We look forward to working with you to achieve these goals.