ESG Compliance and Regulated Sustainability

November 9, 2022
What is your organization’s carbon footprint? If you don’t know, you may have an unpleasant surprise in the next few years. Company behaviors are quickly becoming a critical element in risk management for investors.

 

Many private investors and companies are directing their capital to businesses that show a commitment to environmental, social, and governance (ESG) practices.

The focus on ESG compliance and regulated sustainability got thrust into the spotlight by the investment company BlackRock. In his annual letter to fellow CEOs in 2020, Larry Fink stressed the importance of environmental consciousness in evaluating risk.

Simultaneously, the public sector is also emphasizing ESG. In May 2021, President Biden issued the Executive Order on Climate-Related Financial Risks.

In fact, the Biden administration has focused on strategies to build what the administration calls a “climate-resilient economy.”

The US has set aggressive targets for emission reduction by 2030. It’s important to begin learning what ESG compliance and regulated sustainability mean for your business.

Understanding ESG and Its Business Impact

In a nutshell, ESG encompasses factors that define a business but are not directly related to its finances. Investment companies, banks, and other sources of capital are beginning to include ESG measures in their assessments of risk.

ESG Meaning

Environmental refers to a company’s sustainability practices, including its attitude toward the environment. Social includes diversity, equity, and inclusion practices. Governance has to do with an organization’s decision-making, such as management structures, compliance, and company policies.

Classification of a Company’s Emissions

The Greenhouse Gas Protocol Corporate Standard classifies a company’s emissions into three groups, or scopes.

Scope 1 emissions are direct emissions that come from company-owned resources. For example, fuel from company vehicles or refrigerants from air conditioning are scope 1 emissions.

Scope 2 emissions are indirect emissions that result from energy that your business has purchased. For example, the electricity your business uses counts toward scope 2 emissions. Your lighting, your EV (electric vehicle) chargers, and your other electrical systems all contribute.

Scope 3 emissions make up 60% to 90% of your business’s emissions. Basically, scope 3 emissions are all the indirect emissions that aren’t scope 2. Scope 3 emissions encompass all the emissions in a company’s value chain.

Scope 3 emissions include both upstream and downstream measurements. Upstream refers to emissions from products and services before they get to your business. These could include raw materials or even laptops or office supplies. Scope 3 emissions also include business travel and emissions from your employees’ commutes.

Scope 3 downstream measurements include all the emissions involved with delivering products to your customers and how products are treated at end of life.

Educating Your Business on ESG Investing

As a consultant, Future Energy helps our clients ask the right questions about the future of ESG.

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ESG Clarity

Every business faces different challenges, especially when it comes to communication with vendors and downstream suppliers regarding sustainability metrics.

International emphasis on ESG investing is a relatively new phenomenon. The future of regulations and requirements remains to a large extent unknown. That said, Future Energy is already thinking about what we can do today to help our clients start creating future baselines and measurements.

Understanding Your Company’s Exposure

In March 2022, the US Securities and Exchange Commission (SEC) proposed rule changes that would require public companies to report on certain climate-related risks. The rules would require companies to disclose information on scope 1, scope 2, and scope 3 emissions.

Companies that wait to gather data about their ESG alignment may end up behind in compliance with the new SEC regulations.

As private and public enterprises continue to weave ESG qualifications into risk management portfolios, businesses need to start looking at their exposure. Where does your business sit in this space today?

Measuring the Environmental Impact of EV Charging

Future Energy works alongside our clients’ hardware to measure energy use up and down the supply chain. Using data, we help our clients measure certain key ESG indicators with vendors, suppliers, the retail network and within the business itself.

Sustainability and EV Charging

Demand for electricity increases at various times during the day. When demand taxes the grid, the utility has to bring on additional power plants to supplement energy supply.

So how do electric vehicle chargers fit in? Future Energy’s data-driven solutions help our clients determine when energy demand is lowest and structure EV charging accordingly.

That way, EV charging is less likely to tax the grid, and it helps reduce marginal emissions factors.

Future Energy’s Interface Platform

Future Energy’s Interface software connects, measures, and manages all of your intelligent systems. It integrates with any device and any system on your property, including EV charging stations, lighting, heating and cooling, and Internet of Things (IoT) hardware. Our clients access their energy usage information from one centralized dashboard that they can access in real-time from any device.

The centralized dashboard also consolidates information from all of your subsidiaries so you can carefully monitor energy use. Our data is robust enough to report on scope 3 emissions that are downstream in your supply chain. For example, an original equipment manufacturer (OEM) can use Interface to synthesize energy use data from its dealerships.Ipad and iPhone with Future Energy's dashboard displayed

Energy Consumption and ESG Alignment

Interface’s real-time data collection and management provide Future Energy clients with visibility into their energy consumption. Our energy data experts are able to integrate your company’s baseline energy consumption information with the emissions factors from individual utilities.

In this way, Future Energy helps our clients form a picture of their marginal emissions.

Transitioning to Electrification

Beyond helping companies use data to develop a baseline in understanding carbon emissions, Future Energy contributes to sustainability themes with our EV charging solutions. Many states are working toward sustainability goals through incentives for consumers to drive EVs and for companies to create the infrastructure to charge them.

California, for example, has committed $53.9 billion toward climate goals, with an eye toward climate neutrality by 2045. The California Climate Commitment includes $10 billion over six years in the transition to EVs and a $1.5 billion investment in electric school buses.

image of a person walking in the sand leaving a trail of footprintsMany companies are taking advantage of state incentives to make the transition to an electric fleet, further helping to reduce downstream emissions.

Future Energy deploys telematics in our software. Telematics is a way to monitor vehicles, equipment, and other assets through GPS technology and onboard diagnostics. Our clients are able to track miles traveled as well as the total energy consumed through our EV charging stations.

The creation of a baseline for your carbon footprint is just the first step. Next, Future Energy helps your company use data to create a plan to reduce your carbon footprint and track the reduction in emissions.

Future-Proofing Your ESG Requirements

ESG compliance and regulated sustainability is a changing landscape. For now, it’s about understanding your company’s energy consumption. That depends on data. Contact Future Energy for more information about how our Interface platform can help your company use data to help drive sustainability initiatives.

 

Posted By Sam DiNello

Sam DiNello is Chief Executive Officer at Future Energy. He is an expert in the EV infrastructure space and passionate about innovative data-driven solutions that help companies access real-time intelligence for real-time action.


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