What are the most effective ESG performance practices for the energy sector?
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The energy sector is one of the most critical and challenging industries to achieve environmental, social, and governance (ESG) performance and impact. The sector faces growing pressure from regulators, investors, customers, and society to reduce its carbon footprint, ensure social responsibility, and enhance transparency and accountability. However, the sector also has the opportunity to innovate, diversify, and contribute to the global transition to a low-carbon economy. In this article, you will learn about some of the most effective ESG performance practices for the energy sector, and how they can benefit your business and the planet.
One of the best ways to improve your ESG performance and impact is to align your strategy, operations, and reporting with global frameworks and standards that provide guidance, benchmarks, and indicators for sustainability. For example, you can use the United Nations Sustainable Development Goals (SDGs), the Paris Agreement on climate change, the Task Force on Climate-related Financial Disclosures (TCFD), and the Global Reporting Initiative (GRI) as references to set your goals, measure your progress, and communicate your results. By aligning with global frameworks, you can demonstrate your commitment, credibility, and consistency to your stakeholders and the market.
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Vijay Suryavanshi
Joined Military Engineering Services (MES) on 17 Feb 1994 as Assistant Executive Engineer and voluntary retired on 31 Jan 2020 as Superintendent Engineer/Director (Electrical/Mechanical).
Energy Sector is backbone for resolving climate change issue across the globe and every country irrespective of their boundary should contribute for decarbonization of their energy sector at the earliest since the window available for mitigating the impact of climate change is approaching very fast. Renewables can be a game changer for energy sector across the globe for mitigating climate change impact. ESG will play big role in Energy sector since it is a science based approach to tackle the issues of Environment, social and Governance by the Corporates Sector. There is urgent need for Energy sector Corporates to become Net Zero first than other sector since they are life line of other sectors.
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Another effective practice to enhance your ESG performance and impact is to invest in renewable energy sources, such as solar, wind, hydro, biomass, and geothermal. Renewable energy can help you reduce your greenhouse gas emissions, lower your operating costs, increase your energy security, and diversify your portfolio. Renewable energy can also create positive social and environmental impacts, such as job creation, community development, and biodiversity conservation. You can invest in renewable energy by developing your own projects, purchasing green power or certificates, or partnering with other actors in the value chain.
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Matthew Sekol
Global ESG and Sustainability Advisor at Microsoft | Public Speaker and Writer | Benevolent Troublemaker
At its core, ESG is about managing risks and capturing new opportunities. While energy companies cannot immediately transition due to the availability of renewables, they certainly need to consider what that transition looks like and the timing. This even goes beyond the environmental opportunity. As energy companies transition to renewables, employees must be reskilled on new technologies. For example, when AES retired its last coal-fired plant in Hawaii, several workers were trained on new clean technologies. This match of environmental and social, as led with a quality governance approach, is a great example of ESG at work.
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A third effective practice to improve your ESG performance and impact is to engage with your stakeholders, such as employees, customers, suppliers, regulators, investors, communities, and NGOs. Stakeholder engagement can help you understand their expectations, needs, and concerns, as well as identify opportunities and risks for your business. Stakeholder engagement can also help you build trust, loyalty, and collaboration, as well as enhance your reputation and social license to operate. You can engage with your stakeholders by conducting surveys, interviews, workshops, consultations, dialogues, or forums.
A fourth effective practice to boost your ESG performance and impact is to implement circular economy principles in your business model, processes, and products. Circular economy principles aim to reduce waste, extend the lifespan of resources, and regenerate natural systems. Circular economy principles can help you optimize your resource efficiency, reduce your environmental footprint, increase your innovation and competitiveness, and create value for your customers and society. You can implement circular economy principles by applying the 3Rs: reduce, reuse, and recycle.
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Zoi Kontodimou
Corporate Sustainability Management & ESG PhD Researcher | Chair - CQI Sustainability SIG
The circular economy is a model that tries to extend the life cycle of a product or service for as long as possible. It results in reducing waste to a minimum level by sharing, refurbishing, repairing, using products as a service, recycling etc. In opposition to the linear economy model that relies on infinite and cheap quantities of material and energy, the circular economy relies on renewable energy to maintain products in the value chain for as much as possible. And besides the environment that will benefit from a transition to the circular economy, society will as well due to the increase in the number of available jobs and reduced product costs.
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A fifth effective practice to improve your ESG performance and impact is to adopt digital technologies, such as artificial intelligence, blockchain, cloud computing, big data, and smart grids. Digital technologies can help you enhance your operational performance, productivity, and quality, as well as reduce your costs, risks, and emissions. Digital technologies can also help you improve your customer experience, service, and satisfaction, as well as enable new business models, markets, and opportunities. You can adopt digital technologies by integrating them into your systems, processes, and products, or by collaborating with digital solution providers.
A sixth effective practice to improve your ESG performance and impact is to promote diversity and inclusion in your workforce, leadership, and culture. Diversity and inclusion can help you attract, retain, and develop talent, as well as foster creativity, innovation, and collaboration. Diversity and inclusion can also help you reflect and respond to the needs and preferences of your diverse customers, markets, and communities, as well as enhance your social impact and reputation. You can promote diversity and inclusion by implementing policies, programs, and practices that support equal opportunity, representation, and participation for all.