Regulatory agencies of any kind know that instituting new rules often requires companies to make substantial changes to their business. The ripple effects can fan out endlessly throughout every corner of the organization, with dependencies and contingencies that disrupt even the most experienced change management gurus. But regulatory agencies aren’t intending to incite upheaval, turmoil or failure with strict deadlines or the potentially complex adjustments required for compliance. Those deadlines to comply are put in place for a reason, and eventually, the grace period extended to companies between the time a law is approved and the time it’s implemented will come to an end. For many sustainability and environmental, social and governance (ESG) regulations, that time is now.
The ESG initialism stands for environmental, social and governance. While ESG efforts are grounded in a company’s desire to make a positive difference in the world, ESG itself is a reporting framework that sheds light on how a company manages risk and opportunity as they relate to environmental, social and governance criteria. This enables customers, employees, partners, investors and other stakeholders to vet corporate policies, ascertain progress toward stated goals — their own and those of regulatory bodies — and encourage responsible business practices.
The report “Who Cares Wins” is largely credited with popularizing the term “ESG.” Per that brief, published in 2004 by the World Bank Group International Financial Corporation, the intent was “to support the growth of sustainable capital flows” by seeking to “influence, support, and enable capital market stakeholders to better integrate environmental, social, and governance (ESG) factors into capital allocation and portfolio management processes.” It put more rigor into the way in which companies presented their corporate sustainability efforts, which, at that time, were largely at the discretion of the organization.
Here’s a quick overview of some of the areas each pillar of the ESG framework is concerned with:
Environmental: Greenhouse gas emissions, natural resource stewardship, climate risk resiliency
Social: Employee practices (wages, engagement, etc.) and community impact; may extend to the company’s business partners, too
Governance: How a company is led and managed as well as controls in place for transparency and accountability
ESG regulations have rapidly taken wing since coming into the collective corporate conscience — so much so that the inevitable backlash has taken flight as well. Companies proudly outspoken about their ESG efforts are often in the crosshairs of those who believe such efforts are too costly to sustain, whether for political reasons or uncertainty about the science underlying corporate sustainability initiatives.
Supply chains, warehousing, e-waste output and the logistics of shipping and inventory management raise questions about a company’s carbon footprint. Manufacturing processes bring up issues of electricity usage and waste management. It’s not lost on companies that their desire to “do good to do well” is tied up in the day-to-day realities of getting the job done. With more than 98% of companies reporting some level of detail on sustainability worldwide, many are struggling to meet their own self-imposed ESG aspirations. Unfortunately for those that are publicly traded, those shortfalls are plain for all to see in their annual ESG reports. Perhaps this is one reason that more than $40 billion has been withdrawn from ESG equity funds in the first half of 2024 alone.
It may be tempting to pump the brakes on ESG and corporate sustainability commitments in the face of adversity or to adjust them outward (years) and downward (numbers) as antsy investors hover nearby and new business challenges come to the fore. While some companies accept the reputational damage and environmental degradation that come with this, ignoring legal obligations for ESG and sustainability gets a whole lot less tempting when deadlines with financial teeth come gnawing on the books. Here are just a few:
Compliance timelines will affect different-sized companies operating in various geographies in different ways. That said, just about every enterprise with business partners and customers across legal jurisdictions will have their hands full — regulators and stakeholders won’t be shy about taking a magnifying glass to the claims on Reporting Day 1.
According to KPMG’s recent survey of executives and board members across industries, more than 75% of companies aren’t ready to comply with new ESG and sustainability reporting requirements being implemented worldwide. But if you reread the previous section, those “in-effect” dates are not far away.
Organizations that keep a close eye on the regulatory landscape will have known about potential changes well in advance, and the wise among them will have been making incremental modifications in anticipation of the passage of new laws and regulations. As deadlines loom, however, the realization of what’s left to be done for ESG and corporate sustainability comes into sharp focus — and it can be eye-opening.
For many technology original equipment manufacturers (OEMs), the question surrounding corporate sustainability and ESG plans is not one of intent, but of speed — and more specifically, reporting. OEMs are already making strides with corporate sustainability initiatives aimed at:
Sustainable supply chain management and logistics: Inventory optimization reduces warehouse square footage, and thus greenhouse gas emissions. Fault tolerance efforts and the prioritization of ethical supply chains promote ecologically sound business practices. Smart decisions about sourcing reduce transportation-related carbon emissions.
Circular economy participation: By designing products with sustainability in mind, OEMs are creating less waste and pollution. Products that are more durable, reusable, repairable or recyclable are more environmentally sound, and that ethos can be built into the entire product lifecycle to keep products in use for as long as possible and reduce e-waste output.
Manufacturing processes: Renewable energy sources can be used to power machines, conveyors, equipment, lighting, cooling and more to reduce dependency on fossil fuels. Replacing finite resources with eco-friendly materials reduces the environmental cost of product packaging and facility expansion. Even biodiversity and landscape restoration become part of the equation for those using environmentally consequential raw materials to manufacture their products.
Repair services: Offering global depot repair services impacts a product’s longevity and therefore adds to customer value and satisfaction. It also enables you to profitably recover, reuse and recycle products and parts instead of adding them to the growing problem of e-waste.
The options for implementing corporate sustainability and ESG strategies are boundless, but can feel overwhelming. While some OEMs take on these initiatives in-house, they can become costly endeavors to manage, especially if they drain resources and focus from other key areas of your business. Fortunately, there are high-quality, sustainable alternatives to building in-house infrastructure — instead, many OEMs choose to outsource sustainability-related services like depot repair and logistics processes.
Inevitably, even the highest-quality products may eventually require repairs, and doing them right — and within tight timeframes — is the standard Cohesity set as it sought an outsourced repair services partner. Cohesity needed a provider with exacting technical skills, logistics expertise and the ability to contribute to the company’s sustainability ethos.
Cohesity engaged Shyft Global Services to deliver depot repair services at scale so they could better support their customers and enhance sustainability while remaining focused on innovation and product development. Shyft’s ability to do root cause and failure analysis down to the board component level enabled products to be fixed rather than replaced, reducing scrap rates and extending product lifetime value. Shyft’s expertise in spare parts planning, stocking-level maintenance and flexible supply chain modeling helped Cohesity reduce e-waste, and Shyft’s inventory management expertise and global logistics capabilities streamlined the acquisition and storage of replacement parts.
Cohesity is committed to growing its business in a responsible and environmentally sound manner, and its partnership with Shyft gave its sustainability goals a significant boost. Read the full case study to learn more.
Choosing to go green is one thing. Figuring out how to do so efficiently and cost-effectively is a whole other ball game. And having to do it in lockstep with a complex array of regulatory requirements puts you in another ballpark altogether. A sustainability-driven services partner like Shyft can help you follow through on your company’s commitment to sustainability with a customized approach that incorporates:
Shyft’s comprehensive suite of end-to-end technology lifecycle services and global team of sustainability-minded service experts are dedicated to helping you participate effectively in the circular economy and solve IT challenges. Download “Your Guide to Actionable Sustainability in IT” to explore more ways to minimize your carbon footprint, participate in the circular economy and drive sustainability across your organization.
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