Why Do Stakeholders Care About ESG?
Glen Schrank is the CEO of Phoenix Energy Technologies, whose purpose is to provide energy management through Smart Building IoT analytics solutions.
We spoke to Glen about ESG on our podcast; we discussed why stakeholders care about ESG principles and how to implement best practices. To listen to the podcast in full, click here; otherwise, read on for some of the key highlights from the conversation.
“Employees want to work for companies that have ESG goals and initiatives, and business partners want new partnerships with companies that have ESG strategies.
The benefit of recognizing the link between cost of capital and ESG processes results in improved company performance, including financial reporting and reduced risk.
I believe the pressure to implement this comes from stakeholders, whether that’s investors, investor activists, customers, or government regulatory agencies.
There are many challenges around visibility and knowing what's happening inside buildings, for example, facilities, equipment, assets, energy usage, and CO2 emissions. But once that awareness is gained, it’s all about normalising the data, accumulating it, and getting insights and analytics.
Then, the next phase is what you’re going to do with those insights from a customer’s perspective.
A very small percentage of buildings are new, so the focus has to be on existing buildings and getting the data and information from the existing infrastructure, standardising it and sending it to a single source.
Another challenge is balancing the need for return on investment and payback on ESG initiatives in the current environment. Energy costs have increased exponentially in some parts of the world, and supply chain costs are increasing at an accelerated rate. Therefore, cost has become an even bigger driver. Implementing ESG best practices is an investment, but it allows costs to be saved in the long run and stops energy wastage.
The concept of a duck curve is a good way to visualise energy consumption. In other words, you can imagine energy demand being a lot higher on an evening when we’re all home, cooking, washing, with the lights, heating, and TV on, and with the laptop plugged in. The head and neck of the duck versus the base of the duck is called the demand. This is being exasperated in our current environment, when demand is high, costs are high, and this is also impacting energy sources. When renewables aren't available, consumption all goes to the grid and goes to power generators. From an ESG perspective, it is the dirtiest power that is generated at that moment in time because utilities and energy producers produce the energy in high volumes, so they will go to the old sources such as coal and natural gas, and in some cases, petroleum to get that power. So not only do we have a scenario where it's dirtier power with more CO2 emissions in the atmosphere, but it is also costlier against the bottom line.
However, I do believe there are more opportunities than challenges presented to us at the moment. The majority of buildings have already been built, and these existing buildings have a tremendous opportunity to be retrofitted for energy efficiency to lower CO2 gas emissions and save building owners money in the process.” - Glen Schrank.