We need to talk about ESG – by David Harrop
I must admit that, when I first heard the acronym ESG in April 2021, it was unfamiliar to me, and I had to confess that I did not know what it stood for. It has been reassuring since then to see that most people react this way at first, but then the penny drops when you explain it stands for Environment, Social and Governance. There is absolutely no doubt that these topics are becoming increasingly important for businesses in the UK, and this will only accelerate.
I daresay that, like me, you don’t remember the United Nations Framework Convention on Climate Change coming into force in 1994? I bet however that you are aware of the 26th “Conference of the Parties” on Climate since then, or COP26, that took place in Glasgow recently. Extreme weather events, rising global temperatures and the depletion of both natural resources and animal species are now irrefutable.
The UK Government has signed up to binding legal commitments to eliminate carbon from the UK economy by 2050. Legislation to support the targets is already apparent, with lots more to come. Those businesses that do not adapt and change their business model to a carbon neutral one won’t have a future. Beyond the commercial imperative for respecting the environment is the larger truism that it is just the right thing to do.
At Reward we have adopted an ESG framework where the E of Environment is seen as the area where we can make the biggest immediate impact. We have committed to achieve net zero by 2030 and will bring this forward if we possibly can. We will ensure that none of our waste product goes to landfill and that all of our energy is from renewable sources. We are also looking critically at our travel to work practices.
What has been so motivating so far when considering ESG has been the initiative and enthusiasm with which our team has embraced this agenda. There have been some brilliant suggestions already about reducing our carbon footprint, giving back to the community and about how we interact as a team. The generation entering the workforce now, and in the future, quite rightly have different hopes and expectations of what their employer can provide for them, which is where the S (Social) of ESG comes in, with regards to our people.
As we head into 2022, those companies hoping to attract and retain the best talent need to have a positive, nurturing culture. Colleagues now expect their employer to care about the environment, have progressive, flexible policies towards the team as rounded individuals and have a sincere interest in learning and development. At Reward we are keen to ensure that the team feel involved and invested in what the company is doing and that we positively reflect their input in shaping the business for the future.
In Social matters, Reward have included community in addition to our people initiatives. We have for a long time maintained a program of very active support for our two chosen charity partners each year. Energy goes in to organising fundraising events, and we get a lot of satisfaction from our team’s commitment of this cause. We also recognise the importance of the community around us, and we take pride in supporting local employment through the SME businesses we provide funding to.
Maintaining high standards of Governance and ethical behaviour takes both effort and commitment, and is a very powerful asset for any company. At Reward from day one, we have prided ourselves on being a responsible lender and on treating customers fairly. This involves us continually maintaining close contact with our customers and, should something not go according to plan, working with them to achieve the best outcome for all parties.
In this article I have sought to explain what ESG is and why it is so important. I have also set out a few examples as to how Reward is approaching the subject, not in an attempt at virtue signalling but rather to show that it is possible to make a difference through a series of simple steps, many of which I am sure many companies are already taking. What is beyond dispute is that increasingly our people, our customers and our investors will expect every organisation to have something to say on ESG and they will expect that message to be authentic and for management’s commitment to be sincere.
