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The ESG Value Opportunity: A Decision Point for Utilities

Saba Khalid's picture
Senior Consultant West Monroe Partners

Senior Consultant Energy and Utilities, West Monroe

  • Member since 2021
  • 1 items added with 315 views
  • Nov 22, 2021
  • 315 views

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Co-authored by Kaylene Hung and Jeremy Wiley

As communities around the globe experience more frequent and severe effects of climate change, governments, individuals, and the scientific community are demanding action to decarbonize economies to slow the pace of climate change and take actions to mitigate its effects. The idea of human’s impact on the climate and surrounding environment began with the introduction of the first Earth Day in 1970, followed by the passing of the National Environmental Protection Act (NEPA) and many others.  As extreme weather events continue to affect communities globally in unpredictable ways, there is an ever-increasing emphasis on governments and companies’ businesses to take deliberate action to respond to the effects impacts of climate change in order to build resilient communities. The development of the Environmental, Social, Governance (ESG) criteria is one of the solutions in response to climate change. ESG requires organizations and businesses to consider their environmental impacts, how an organization it treats and values their employees, and the principles and policies an entity uses to make its decisions. ESG has become a focal point with investors and financial institutions as many investors are looking to these influential organizations to address the growing pains with climate change and how companies should be performing on a moral basis. There is a growing need for an overarching ESG framework to be established at every company; however, utilities have the market and ample opportunity to lead efforts in this space

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Matt Chester's picture
Matt Chester on Nov 23, 2021

Utilities with an ESG framework benefit from limited government intervention, engaged employees, and overall support decarbonization goals dictated on a national and international policy level.

Such a key point in the conclusion. While it would be great if ESG was a top priority just because the utility wanted to do right by the planet, by the people interacting with them, all for altruistic purposes, the reality is it always will come down to a business decision. And the decision point is this: do you want to do this now on your schedule and be ahead of the game (and start seeing the institutional benefits like employee retention and customer satisfaction) or will you wait for the inevitable stick to come from the government that will no doubt require quicker implementation times regardless of the budget? 

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