In the future, environmental, social and corporate governance (ESG) reports will affect your material handling equipment purchase process.
Buying a forklift is no longer just to compare the best 名媛直播. Add an item to the expense column of your account book and create a process for the continuous monitoring, management and maintenance of the above machinery. As climate change becomes the focus of all industries, ESG's strategic requirements will only play a greater role when you choose forklifts.
The ESG report may require that, as a supplier or user of Material Handling Equipment (MHE), you be prepared to discuss carbon footprint, energy efficiency, waste and recycling with your customers. You must provide relevant data as part of the sales and contracting process.
Carbon emissions must be tracked accurately, which means understanding different types of emissions, which are divided into Scope 1, Scope 2 and Scope 3. These definitions are as follows:;
● Scope 1 - direct emission of resources you own or control. For example, a food and beverage manufacturer uses its own forklift fleet. Their emissions fall within range 1.
● Scope 2 - Indirect emissions from energy purchased or acquired. For example. The air conditioning and heating of a production facility is supplied by the coal burning utility sector. Its emissions fall within scope 2.
● Scope 3 - Indirect emissions from the value chain resulting from activities carried out by assets that are not under the control of the reporting entity. For example, a 3PL partner of a food and beverage company uses a forklift in a warehouse or distribution center. Their emissions fall within range 3.
Major Development of American ESG Regulations in 2022
The new ESG regulations will enter into force as early as December 2022, before challenging or acting through Congress. Here are the key developments you must be aware of.
US Securities and Exchange Commission proposes disclosure rules related to climate change
The US Securities and Exchange Commission's climate change disclosure rules are extensive. If adopted, the reporting company will be required to disclose its climate change risks in its registered statements and annual reports. There are three dates you should pay attention to.
● You can expect to finalize the rules and convey formal legal guidance by December 2022.
● If Congress does not take legal action or challenge, the new climate change requirements will come into force. Larger accelerated filer organizations will need to track their ESG strategy, risks and performance in 2023 to prepare for their SEC reports.
● By 2024, eligible enterprises will be required to disclose their SEC 2024 report in fiscal year 2023 according to the first set of climate disclosure standards.
Third party assurance/audit ESG report
The third party's assurance of the report is gradually becoming a trend. Given the increasing legal and litigation risks of inaccuracies and fund labelling, companies engaged in ESG reporting should consider providing assistance in reporting.
It is less costly and troublesome to do things right the first time than to do them again and finally pay the fine. This is complementary to the next point.
Legal and litigation risks of inaccuracies in how you mark your company's expenses
In view of this risk, the reporting company must strengthen due diligence. These requirements will not disappear, so you must make the ESG report part of your overall strategy. Regular, consistent and continuous tracking of required standards can ensure better results.
What are the benefits of ESG reporting for private companies?
From retaining and recruiting customers to strengthening partnerships, ESG reports have proved to be of great benefit to the organization.
Therefore, although these requirements may seem overwhelming, they are well worth following and implementing the necessary system and procedural infrastructure in the grand plan of business operation and expansion. Here are three key opportunities worth mentioning.
Move to more efficient "green" solutions, such as lithium batteries
The shift from standard battery solutions to lithium batteries seems to be a minor change, but even the World Economic Forum firmly believes that advanced batteries are a key part of the energy transformation and will have a far-reaching impact on climate change.
Lithium ion forklift battery has several advantages, including:
● High energy density and high energy conversion efficiency
● Long cycle life
● More secure solutions
● Better shelf life
● No health hazards
● Stable performance under extreme temperature conditions
● Others
Less energy consumption, longer service life and lower maintenance requirements mean cost savings. Saving costs means increasing profits.
Investor Relations
Organizations wishing to receive future funding should give high priority to the ESG report. Tomorrow's investors are more environmentally conscious and pay more attention to climate change than past investors. They will investigate whether the company has checked some climate change boxes before further participating. To ensure that your company's future may depend on investor relations, which will be improved through green measures of appropriate monitoring and auditing. Some risks of failing to understand and adapt to ESG may include low valuation of the company, lagging behind peers and competitors, declining attractiveness to employees, higher insurance premiums, lower earnings, fines for violations, etc
Employer attractiveness
There are many factors that are important for today's workforce, but Gallup said that 42% of employees value a diversified organization that includes all types of people. Future employees will not only look for career opportunities focused on growth, but also seek to comply with and abide by ESG activities. In the coming months and years, your attention to ESG may greatly affect your ability to find the right talent.
A barometer of sustainable procurement in 2021
● In July 2021, EcoVadis and Stanford Business School's Value Chain Innovation Program jointly released the "Barometer of Sustainable Procurement in 2021", which covers the views on sustainable procurement. The following are the main contents of this document:
● The procurement strategy is driven by labor and human rights issues, environmental factors, social issues and business ethics.
● 61% of procurement directors said that social issues would become an important part of their strategy in the next two to three years.
● 71% of suppliers and 63% of companies said that their sustainable procurement plans helped them overcome the COVID-19 pandemic and difficulties.
● 69% of respondents now consider sustainability performance when renewing contracts or selecting new suppliers.
● 48% of medium-sized enterprises believe that sustainable development initiatives will have a positive financial impact on their businesses, and 47% believe that this will simplify costs and improve operational efficiency.
Core Elements of ESG Strategy and Reporting for Enterprise Customers
When it comes to ESG strategy and reporting, you need to know a lot. There is no practical method to cover all contents here, so it is recommended to carry out additional self-study. The following is a broad overview of ESG, their meaning and some reporting standards.
Environmental aspects
E in ESG refers to environmental standards, energy you consume, waste you generate, resources you need, carbon emissions and climate change. These are guided by the basic principle that every company will affect and be affected by the environment.
Greenhouse gas (GHG), including the carbon emissions of Scope 1, Scope 2 and Scope 3 above, is the core of major reporting frameworks such as CDP (formerly the Carbon Information Disclosure Project) and the Global Reporting Initiative (GRI).
Reducing hazardous waste is also an important component of environmental standards. For more information, see the section on "green" solutions such as lithium batteries in this article.
Social aspects
S stands for social standards. The focus here is on inclusiveness and diversity, your relationship with employees, and the communities and institutions with which you do business. Like environmental standards, the concept is that the company lives in a diversified ecosystem, so we should pay attention to the diversity of its personnel and company culture. Following social standards can improve the company's reputation, better reflect people's values, and attract better talents from different groups.
The social report contains many standards, including but not limited to:
● Human capital
● Health and safety
● Chemical safety
● Disputed procurement
● Social opportunities
● Access to financing
● Access to health care
Governance
G represents governance, especially the procedures and processes that you create for self governance when executing ESG reports and activities. It also includes the interests of stakeholders and compliance with the law. Every company is considered legally created and therefore governed.
The governance report contains many standards, including but not limited to:
● Corporate governance
● Diversification of the Board of Directors
● Executive compensation
● Ownership
● Accounting
● Business ethics
● Corruption and instability
● Tax transparency
Which regulators are developing ESG guidelines and reporting standards?
In addition to a clear understanding of the ESG and everything it involves, regulators who understand the setting of the enterprise's ESG agenda will ensure a more comprehensive understanding of these issues.
The following regulators are responsible for developing guidelines and reporting standards:
● Sustainable Development Accounting Standards Board (SASB) International Sustainable Development Standards Board. The most relevant environmental, social and governance issues related to 77 different industries were identified.
● Public Company Accounting Oversight Board (PCAOB) Standards and Emerging Issues Group. Establish auditing and professional practice standards when preparing audit reports.
● American Institute of Certified Public Accountants (AICPA) Sustainability Assurance and Consulting Working Group. The Guide: Assurance of Sustainability Information is being updated to include important information on greenhouse gas emissions and corporate social and environmental performance. It is essential to pay close attention to future development.
conclusion
When buying equipment for your company or selling it to customers, you must consider environmental, social and governance factors.
As the company has made great progress in taking green initiatives and working together to reduce climate change risks, it needs to comply with a wide range of reporting requirements and require third-party assurance to ensure accuracy.
Decisions can no longer be made in isolation. They must have a more comprehensive understanding of the company's objectives, as well as ESG responsibilities and activities.
This will help you gain more (usually corporate) customers who are concerned about the environment and require suppliers to provide ESG reports. The benefits of the ESG report are well worth investing in advanced material handling equipment.
Wikipedia ESG
Environmental, social, and corporate governance (ESG) is a general term, which refers to the framework aimed at integrating into the organization's strategy to create enterprise value by expanding the organization's objectives, including identifying, evaluating and managing the risks and opportunities of all organizational stakeholders (including but not limited to customers, suppliers and employees) and the environment related to sustainable development.
Environment: focus on protecting the natural world. Specific themes include climate change, greenhouse gas emissions, biodiversity loss, deforestation, pollution, energy efficiency and water resource management.
Social aspects: focus on people and social relations, including efforts to support gender equality and diversity, equity and inclusion campaigns, and improve customer satisfaction and employee engagement.
In terms of corporate governance, it focuses on going beyond the usual ways of governance of organizations in the past and strengthening corporate governance. Specific topics include board composition, cyber security practices, management structure, executive compensation, prevention of bribery and corruption.
Many organizations and financial institutions have designed methods to measure the consistency of specific companies with ESG goals. The most prominent global movement in this regard is the Sustainable Development Goals (SDG) adopted by the United Nations in 2015. The term ESG first appeared in a 2004 report entitled "Who Cares Wins", which was jointly prepared by several financial institutions at the invitation of the United Nations.
In less than 20 years, the ESG movement has evolved from the corporate social responsibility initiative launched by the United Nations to a global phenomenon with more than 30 trillion dollars in assets under management. It is said that in 2019 alone, US $17.67 billion of funds flowed into ESG related 名媛直播, an increase of nearly 525% over 2015. Critics claim that ESG related 名媛直播 do not and are unlikely to have the expected impact of increasing the capital cost of polluting companies, and accuse such "green washing" movements.
