Waste Management – Path to Sustainable ESG Management

Importance of ESG Criteria

The approach to environmental, social and governance (ESG) issues has shifted from being viewed by some as a public relations tactic to being seen by many as a major focus area for boards and management teams. There is a broad consensus that companies which manage, measure, and monitor their ESG matters proactively, are more likely to deliver sustainable growth.

Some of the main objectives and benefits of ESG analysis and reporting include the provision of valuable insights on non-financial elements which could have significant impacts on financial metrics, hence enabling more informed investment decisions.

Companies stand to lose substantial investment opportunities without environmental, social and governance (ESG) compliance, which has become an increasingly important criterion for inclusive, equitable and sustainable growth. It makes good business sense as it leads to sustainable development for both companies and the communities.

Many economic experts believe that it is necessary for corporations to transition from corporate social responsibility (CSR) to ESG, given the increasing attention and emphasis investors are paying to ESG compliance. CSR alone may not address the overall negative impact the business may cause in many cases.

Enhancing ESG Frameworks 

Identifying three to five ESG criterias that align to business strategy is a good base off where companies can start building an ESG framework. Even though the measurements may vary across platforms and industries, these are some common areas monitored within the three areas of Environmental, Social and Governance factors.

The application of the ESG standards can be enhanced by providing better transparency and thorough reporting via quantifiable metrics collected and reported regularly to address ESG gaps in the business, material risks and growth opportunities. 

Companies can adopt the Task Force on Climate-related Financial Disclosures (TCFD) and Global Reporting Initiative (GRI) ESG standards to achieve this.¹ 

Waste Matters for ESG Investors

A circular economy needs businesses not just to maximise recycling and minimise waste but to fundamentally re-engineer their products and services.

It identifies three main elements to building a circular, as opposed to linear, economy: 

• Design out waste and pollution
• Keep products and materials in use
• Regenerate natural systems

This means products need to be designed for a cycle of disassembly and reuse, rather than waste. They need to be created from natural materials and then returned to natural materials at the end of their life. In effect, the circular economy replaces the concept of a consumer with that of a user.

This also means being efficient in the use of water, energy and materials, reducing packaging and raising recycling rates, and asking consumers to consider sustainability as a critical factor in their purchasing decisions.

Recent research from management consultants Accenture found that the potential economic benefits from the circular economy could be as high as $4.5 trillion by 2030. It also makes sound financial sense. As resources become scarcer, their price goes up. Those dependent on them to make their goods face higher costs and that is unsustainable over the long-term.²

As of early 2022, listed companies are gearing up towards fulfilling the ESG and Sustainable Development Goals (SDG) requirements given more comprehensive global compliance. Most companies are already expanding ESG compliance to encompass the 17 SDGs which serve as an indicator for companies overall growth. ³