ESG under the microscope – E for Environmental

ESG – three letters that are and will continue to be a significant influence on all of society. Nevertheless, many companies and people still have no idea what to picture under each letter. That is why we decided to analyse each one in detail. So, what is hidden under the first letter E?

Cracked dry soil

Criteria that consider the environment

We have previously presented individual ESG principles as well as terms and abbreviations associated with ESG.

The environmental part monitors non-financial criteria that measure the impact on the environment. Problems such as climate risks, water shortages, extreme temperatures, forest fires, floods and increasing
carbon emissions are now threatening economic
growth. Understanding these environmental
risks means understanding the "E" in ESG.

"E" focuses on how a company uses natural resources and the environmental impact of its operations, including supply chains. In other words, the environmental factor examines a company's efforts to reduce its carbon footprint and protect the environment.

Graphs and analysis

Sanctions for negligence

Companies that neglect environmental impacts may be exposed to greater financial risk. Without taking appropriate measures, they can face sanctions, reputational damage and worse economic results.

Solar panels as sustainable energy sources

Climate change has a negative financial impact on companies that fail to adequately plan for its likely impacts in the form of increased investment in new energy sources or technologies.

Banks also incorporate ESG criteria into their credit processes and monitor the environmental profile of the company in question.

Waste sorting and a packaging-free approach in the company kitchen

Not easy to put
into practice

In addition to the already mentioned carbon emissions, the criteria also evaluate, for example, the use of water and land, waste management and the creation of additional pollution. Despite growing awareness of the issue and the great efforts of public authorities, the situation is still extremely complicated in certain areas.

The issue of decarbonization of industry, especially heavy industry, is extremely complex. Competition is often global and margins are low, assets have long lifespans – 30 to 60 years. So there are few suitable moments for renewal. New low-emission technologies are not always commercially competitive or the technology is not mature. The decarbonization of agriculture, which is a significant producer of methane, will be similarly complex.
Pavel Kubička Member of the board of directors and director of the Decarbonization Department at ČEZ ESCO

The first "e" steps​​​​​​​

Even so, there are steps that companies, regardless of their focus, can already implement as part of their environmental initiatives. Some of them can be surprisingly simple and are also connected to the actual operation or appearance of existing offices. Tips for greener business include:

  • Reducing energy consumption and switching to renewable energy sources
  • Developing ecological products and services
  • Transitioning to products with zero waste
  • Using biodegradable packaging that does not fill up landfills
  • Sorting waste and reducing the volume of waste in landfills
  • Reducing carbon emissions by switching to modern LED lighting
Protecting the planet

Many solutions do not necessarily come with high costs. However, the ESG issue is still complicated, and therefore we do not recommend that companies attempt to tackle it on their own.

Fortunately, there are many knowledgeable experts
in the Czech Republic, both on ESG reporting itself
and on individual principles.

In the environmental field, we work closely with colleagues from ČEZ ESCO, who specialize in decarbonisation, energy management and smart buildings. If your company also wants to reduce its impact on the environment, do not hesitate to contact us. We will provide you with complete consultancy in the area of sustainability.

Authors of photos: Petr Andrlík, Unsplash, Pixabay

Published: 12 October 2022 

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