Macadamia Service Management
ESG – Environmental, Social, and Governance
“What is SDG and ESG?”
In an article named “What is SDG and ESG?” written within the context of mankind’s long-time quest to limit the pace of its destruction of the world, Dean Emerick, a curator on sustainability issues with ESG The Report, explains as follows:
“These two acronyms may not seem like much at first. But in less than a generation, if we are lucky, every child will know exactly what they mean. SDG stands for Sustainable Development Goals and ESG refers to quantifiable and measurable factors that represent sustainable practices. SDGs are part of the United Nations 2030 Agenda for Sustainable Development. They are a series of 17 goals to be completed by 2030 as a part of transitioning to a new global circular economy.”
The circular economy is a systems solution framework that tackles global challenges like climate change, biodiversity loss, waste, and pollution. We must transform every element of our take-make-waste system: how we manage resources, how we make and use products, and what we do with the materials afterwards.
ESG provides a framework to guide investing in companies that assesses a company beyond just its financial performance – and incorporates consideration of its environmental (E), social (S) and governance (G) performance, and how these drive the creation and protection of value. ESG has become increasingly popular with investors who want to invest in companies that are financially resilient, and which are addressing the social and environmental challenges of our time. ESG understands that companies are inseparable from their environmental, social and governance contexts, and that securing social and environmental well-being are prerequisites for a company’s long term financial success. ESG provides the guidelines by which investors can evaluate and hold companies accountable for their actions.
The most recent Conference of the Parties (COP26) in Glasgow, has helped push SDG and ESG even further into the limelight. The global community has reaffirmed their commitment to the Sustainable Development Goals.
The main differences between ESG and SDGs are as follows:
SDGs are global time-bound goals set out by the United Nations intended to guide the global community, countries, policy makers, civil society and the business community towards sustainable development. ESG is a rating system focused primarily on the business sector and provides a basis to integrate sustainability within business strategy and operations. ESG is used to measure the environmental and social credentials of companies and how well a company is performing in terms of its awareness and management of its social and environmental dependencies and impacts throughout its internal operations and across its supply chains. ESG focuses on the business transformation needed to secure ongoing financial viability and solutions to the world’s social and environmental challenges
Improvement in a business guided by ESG:
The overall aim of ESG is to encourage businesses to recognize that they are integral parts of a larger interconnected system that they both depend on and impact, and to adjust their behavior accordingly. ESG enables them to be value-adding “corporate citizens”, that secure their financial well-being while improving their environmental and social credentials. This holistic systems perspective and the attributes that result make them highly attractive to both internal and external stakeholders, including investors, employees, customers, suppliers and local communities.
ESG Subjects Include
- Limiting the degrading impacts – such as, greenhouse gas emissions, other pollutants, wastewater, land-use change, soil degradation etc.
- The efficient use of all key energy and material inputs – such as electricity, fuels, packaging materials, agrochemicals, fertilizers etc.
- The transition away from dependence on finite/non-renewable resources, including all fossil-fuel based energy and inputs.
- Securing needed societal inputs (social and human capital) – such as needed human resources, technologies/know-how, market access, supportive regulatory and Industry institutions, aligned value chains etc.
- Securing societal good will and a license to operate – such as, adoption of ethical employment and business practices, respecting of human rights, transformation, equity & diversity, securing employee health & safety, paying fair wages, providing healthy and safe products, building positive community relations, building “shared value” etc.
- Leadership and board structure, risk management processes and internal controls, strategy development and execution etc.
- Ensuring legal compliance within the business and across supply-chains.
The ultimate measure of success of the above is in financial performance, including financial stability, shareholder returns etc.
Companies with good ESG scores are not only securing their own financial success but are positioned to be rewarded with greater investment, improved reputation, greater differentiation and access to new markets. In short, companies that pay attention to ESG will perform better than those that do not.
Consumers are the cornerstone of ESG. ESG is very important to consumers because it gives them confidence that the company they are spending their money with is socially responsible. If every business is transparent, then you know exactly where your money is going and how it is being used. If a company is dishonest or untrustworthy, consumers can vote with their wallets. This can also be applied to countries as a whole.
Transparency can help consumers make decisions about where they invest their money; what products they buy; which companies to support, and ultimately how to create positive change in society. ESG is important because it makes companies accountable, which ultimately helps the consumer build trust with them and their products.
The MSM MESSAGE
MSM is ideally positioned and structured to catalyze the Industry towards ESG compliance: Its integrative and collaborative role, and its connectedness with all the components of the supply chain: production, processing, distribution and consumer response / customer care – all point to MSM’s unique vantage point from which it can position the Industry as the ESG leader globally.
Marketing and sales are the main thrust of MSM’s effort and therefore it is of utmost importance that we want to connect our Trade Platform with customers that have the confidence that they are spending their money with an entity in the Industry that embraces ESG, promotes it, and is able to credibly demonstrate it. To enjoy the appeal of customers and consumers alike, we have to be able to reflect ESG compliance efforts tangibly with respect to all the structures and companies forming part of the MSM supply chain.
This is not only necessary to distinguish ourselves as preferential suppliers to key markets, but also because we have a real concern about the impact of the Industry on the environment and on society. The expansion and participation frenzy that evolved from the booming of the macadamia industry has led to increasing concern regarding the ecological impacts of macadamia production. Aspects such as loss of biodiversity, mono-culture invasion up to DNA level, excessive chemical application of toxins and artificial nutrients, destruction of riparian forests, wetlands and ecological strips, indiscriminate change of land use, increased water consumption for irrigation, increased consumption of fossil fuels, and increased electricity consumption for drying and storage requirements (and associated GHG emissions) have the potential to drive consumers away from one of the world’s healthiest foods.