ESG: Good for Business, Good for the Planet—Reflections on the Global Vision 2045 Conference
In November, Foss & Company Managing Director Bryen Alperin and Associate Vice President of Renewable Energy Investment Operations Annie Amrhein travelled to Sharm-El-Sheikh, Egypt to join business leaders from around the world in sharing best-practices that promote the United Nation’s Sustainable Development Goals (SDGs) within their organizations. We have included their reflections from the conference below:
Climate change is a global problem. What insights did you gain through the lens of a global assembly of leaders and experts that differ from US-focused events?
One major reflection I took away from this type of global assembly is how climate change, associated impacts, and overall management of these impacts, has no bounds. There were so many different industry players present from product manufacturing to electric vehicles to real estate management to professional sports to public officials. This varied representation was significant and showcased quite clearly how climate change issues are not contained nor confined to one sector. I think where there is variation is how companies and industry players are choosing to enact sustainable solutions. Although the underlying goal may be the same, due to the nature of a company’s core mission, revenue stream, position within the market, etc., these differing factors influence how decision-makers not only develop but ultimately implement within their given business structures.
Throughout discussions, what were some general consensuses between global leaders and experts concerning sustainability? What were some of the biggest differences in perspectives?
The conference showed evidence that the “sustainability and environmental initiatives are bad for business” argument no longer holds merit. In fact, I think the opposite is now the case of if a business representative is unable to speak to what the company is taking to decarbonize infrastructure, minimize waste, promote sustainable measures throughout its employee base, then it may result in negative business implications. From our perspective, this shift in conversation is evident based on investor inquiries on ESG components of these solar investments and how they can use these investments to frame the company’s ESG narrative to internal and external stakeholders. It’s quickly becoming an integral part of corporate conversations, where sustainable initiatives are now coupled with positive development, overall business growth, and a corporate pillar.
Did your opinion on any current trends or industry buzzwords change as a result of discussions?
One buzzword that didn’t have much of a presence was “green”. Previously, it seemed like this word had been connected to many catchphrases when it came to climate change discussions. However, based on this conference, it seems like the new focus is on “ESG” or at least reference to it whether in relation to initiatives, contributions, and participation. This shift shows how there is more legitimacy to climate change and how people are approaching it within a business context.
What key similarities were seen in successful sustainability initiatives shared at the conference? How can they be applied to a company trying to reassess its ESG strategy?
One of the biggest components to implementing and ensuring successful sustainability initiatives is commitment. If the initiative does not identify leadership to direct the ESG or sustainable program, then there is no accountability. It became quickly apparent that those organizations achieving success in the areas of sustainability and ESG had directives flowing top-down from the organization. The reason being these initiatives, as with any business initiative, require resources and oversight. If resources are not specifically allocated, then integration and implementation into the overall company strategy or day-to-day business activities cannot occur. Ultimately change takes effort and if effort is not applied, then a company will not be able to change behavior meaning operations, processes, etc.
How does tax credit investing fit under the Sustainable Development Goals the conference centered around?
Tax credit investing fits under SDG 7– Affordable and Clean Energy, and SDG 9—Industry, Innovation and Infrastructure. Regarding SDG 7, tax credit investing indirectly impacts this goal because it helps solar projects receive financing that ultimately aids in the project’s development and construction. If the projects participate in a community solar program, then this directly impacts SDG in that it provides individuals with an opportunity to participate in clean energy programs, and therefore access to affordable clean energy, that they otherwise may not have had access to.
Regarding SDG 9, tax credit investing, as it relates to solar and potential new emerging energy technologies, directly correlates to infrastructure development. This part of the capital stack is a necessary component and without our participation, it would inhibit certain developer’s ability to construct these solar sites that produce many indirect benefits. This segment of tax equity brings together the three components of this SDG as we deal and help to integrate all three components of this goal.
Sustainability requires a multifaceted approach. How does tax credit investing compare as a sustainability strategy to some other popular strategies shared at Vision 2045?
It’s not necessarily about comparison, but more about diversity when it comes to establishing a sustainability approach. It seems a bit counterintuitive to compare sustainability strategies as this ultimately leads individuals to identify “better” or “worse” criterium. However, it’s more about identifying the sustainability framework and therefore, the approach that aligns best with the corporate strategy and existing infrastructure. Tax credit investing compares as a sustainability strategy in that it brings together various stakeholders to participate in an economic structure that incentivizes a behavioral shift, and in the case of solar tax credits, that shift results in the construction, development, and implementation of renewable energy.
Studies show that change is underway. ESG investments have increased in recent years and are expected to grow further as a result of organizations growing more aware of its impact and profitability. Read about the unique opportunity for institutional investors through tax credit investing with companies like Foss.