Exploring the Environmental and Economic Opportunity ESG

By Edward Pigg, Managing Director, Axil Integrated Services

Earlier this year, we commissioned independent research company Censuswide to gauge how senior decision-makers in UK companies feel they are performing against their sustainability targets.

The “E” or Environmental in ESG has become an increasingly prevalent watchword in boardrooms. It’s clear that most businesses are trying to do their bit and do the right thing for the environment. But, as our research shows, taking tangible, sustainable action is often easier said than done.

Almost all of the businesses (98%) we surveyed said they are actively looking at ways to reduce their scope one, two and three emissions. Meanwhile, 60% of companies have spent more money on reducing their environmental impact over the last year.

The question is: are they moving the needle?

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While sustainable ambitions are important, companies often require specialist support to achieve them. Targets like net-zero carbon emissions and zero-waste to landfill need to be backed up by clear data and the right plan of action.

While some companies are leading the way, many are struggling. According to our research, only 24% of companies said they had a clear path to reaching their sustainability goal. Meanwhile, only 27% of the companies we surveyed said they had full visibility of their sustainability data, and one in five businesses (19%) went as far as to say that they do not measure and report their environmental impact.

Waste not, want not

Looking more specifically at waste, our company’s specialism, the research found that 88% of companies thought that waste management played a role in reducing their carbon footprint.

However, 48% of companies say that they aren’t doing enough to reduce the amount of waste they produce.

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Developing a sustainability plan in no mean feat, particularly for SMEs who might lack the resources and specialist knowledge of larger organisations. However, unless businesses start to work towards sustainable solutions now, they risk being left behind by customers and employees. They could also be caught out by a raft of new environmental legislation coming down the line.

There is no silver bullet approach. At Axil, it’s our job to help our customers find practical solutions to often complex problems. Where others see waste, we see potential. The potential to reduce the materials businesses produce. The potential to treat what others throw away as valuable materials that can be reused or recycled. And the potential to reduce costs while doing so.

That last point is key. Sustainable practice is not incompatible with companies’ bottom lines. In addition to being better for the environment, more efficient processes can help save companies time and generate value. 55% of the companies we spoke to say the cost of implementing sustainable initiatives had been minor, while 27% said they had saved them money.

Making real progress

Our report highlights some of the environmental themes and concerns businesses should be watching out for over the coming years, along with insight from companies like LEVC and Whirlpool, who have made significant strides in this space.

The road ahead will not be an easy one, but it is a path we all must tread. It’s therefore essential that we are pragmatic about both our goals and the practical steps we can take to achieve them.

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The barriers and driving forces for sustainability

Overall, businesses understand the need to prioritise sustainability, with over a quarter (27%) stating it’s integral to their business and half (50%) admitting that while it’s a growing focus, other commercial priorities come first.

The biggest barrier to achieving their sustainability goals cited is a lack of education across their business. Three in ten (30%) say a lack of government incentives or support is a hindrance, while an equal amount argues more support is needed at an executive or board level.

However, when it comes to pushing forward initiatives within an organisation, the biggest driver is growing customer expectations (40%). In addition, other critical factors are the importance placed on the environment by employees (37%), getting ahead of new government regulations (37%) and offsetting production costs (36%).

Measures in place currently

The world created a record 2.2bn tonnes of waste in 2021. Although most companies (88%) recognise that was has an impact on their carbon footprint, it’s concerning that two-thirds (68%) have yet to commit to a zero waste to landfill target. In fact, half (48%) feel that their business is not doing enough to reduce the amount of waste they produce.

Despite the adage “what gets measured gets done”, it appears that visibility is limited amongst businesses when it comes to waste management and its environmental impact. One in five (19%) reveal their business does not measure and report its environmental impact. Of those that do measure and report, only a third (34%) say they have full end-to-end visibility of their sustainability data.

Sustainability’s impact on the bottom line

The financial impact of sustainable initiatives has been mixed. A small minority (14%) say that introducing environmental measures has been costly, with more than half (55%) stating it was a minor financial outlay. However, more than a quarter (26%) argue investing in sustainability programmes has actually saved them money.

With businesses under sizeable cost pressures due to the escalating inflation figures, it’s understandable that finances are tight. However, the report reveals that many businesses are missing an opportunity to not only reduce costs but make money in the form of rebates for waste products. Just half of businesses currently receive rebates for their waste products, despite knowing this option existed. And a quarter (25%) of those do not believe they are always getting the best value for their waste materials.

To understand how businesses are approaching their sustainability initiatives, the research asked a group of 200 business decision-makers that have an influence over sustainability, waste and environmental decisions within their business in companies with more than 200 employees. The full report, Exploring the Environmental and Economic Opportunity of ESG, can be found here.