Sustainability is not a new concept, but its integration into our daily working practices is becoming increasingly prevalent. Indeed, shareholders, customers, and employees now expect chemical distributors to rise to the challenge and implement change.
During our recent webinar, Navigating Sustainability: An Introduction to EcoVadis and Responsible Distribution’s New Sustainability Code, Tina Chetty, Account Executive at ESG Solutions highlighted the growing importance of sustainability to modern business and explained the many reasons why it should be central to strategic decisions moving forward.
The recent hour-long session outlined what sustainability looks like from the perspective of the chemical sector, the key drivers, who the stakeholders are, and the potential return on investment.
“The key takeaway from the session was that companies should be proactive rather than reactive,” said Chetty.
“Things need to get extremely hot before people decide to leap from the status quo into new waters. The downside of not changing is more motivating than the upside of doing things differently,” she said.
“In the corporate world, many business decisions are risk-based. Upside opportunities like increased profits are then used to rationalize retroactively and positively reframe the decision. It's the fear of staying on a burning platform of risk that provides the initial motivation. In the 21st century, a smoldering platform of global environmental, social, and governance (ESG) risks can blindside unprepared companies.”
Reports have pointed to multiple global risks in the coming years that will have a significant impact on business. A greater emphasis on sustainability will help mitigate some of these, she added.
“ESG has moved from being aspirational to now being essential – a critical component of business decision making,” said Chetty.
According to the annual EcoVadis Sustainable Procurement Barometer survey, around 69 percent of respondents say customers are considering sustainability performance when selecting new suppliers and renewing contracts. This is up significantly from 51 percent in 2019. Procurement departments are also now asking suppliers to share details about their sustainability performance.
Employees are also prioritizing change. Chetty noted that 64 percent of millennials wouldn’t accept a job if their employer did not have strong ESG policies and that 83 percent would show more loyalty to a company that helped them contribute to social and environmental issues.
Pressure is also coming from the government, with an “alphabet soup of regulations” forcing organizations to embed sustainability into their business strategies.
There has also been an increased push from consumers – with 85 percent more likely to buy from a business that is known for being more sustainable.
Lastly, she said, lenders and investors are now eyeing ESG performance as a key criterion for loans and financing.
Companies that commit to sustainable working practices often boost their performance, operational efficiency, innovation, and competitiveness.
As part of NACD’s commitment to help drive continuous improvement, a new sustainability code will be incorporated into Responsible Distribution 2023, which goes into effect in January 2023. Code VI: Sustainability will include existing waste management, resource conservation, and community outreach specifications as well as new elements emphasizing environment, labor, human rights, ethics, and much more.
Members verified in Responsible Distribution will now receive a strength endorsement if they participate in EcoVadis assessments. Additionally, achieving at least a bronze rating when companies go through an EcoVadis assessment will help companies meet the Code VI requirements of Responsible Distribution.
Sustainability is a complex and increasingly pressing issue and requires commitment and investment to be successful. Getting it right builds trust, reduces risk, lowers costs, and encourages growth.
For those of you who missed the webinar Navigating Sustainability: An Introduction to EcoVadis and Responsible Distribution’s New Sustainability Code, you can access the recording here.
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