Tenon FM on building a sustainable business with Environmental, Social, and Governance (ESG) and addressing ESG objectives
ESG Demystified: An Overview of the Pillars
A framework called environmental, social, and governance (ESG) is used to evaluate an organisation’s operations and performance on many ethical and sustainable concerns. It also offers a tool to gauge the advantages and disadvantages for business in certain fields.
Since the phrase was first used in 2005, ESG has been a factor in investment decisions, with businesses favouring partners who try to improve the world. In other words, it makes it relatively simple to evaluate a company’s mode of operation in the context of the following areas of its governance, social effect, and environmental performance.
The Essential Trifecta of ESG
Environmental: As an example, consider carbon emissions. If you are in charge of a business and 2,000 cars transport employees between their residences and the office each day, you will have a negative environmental impact. However, you can reduce your environmental effect by switching from a fleet of diesel or petrol vehicles to electric ones. As there will be zero tailpipe emissions, it will help reduce the carbon footprint.The government, local governments, and companies like ours are all accountable for India’s vow to achieve net-zero by 2070.
Social: In a broader sense, the social component of ESG focuses on creating a diverse, safe, and equal work environment. It also refers to an organisation’s relationships with stakeholders. For example: Do we pay equally for hard work, regardless of gender? Are we paying our employees fair and compliant wages? Do they meet the requirements for the minimum wage? The social component of the ESG programme enters the picture here.
Lastly, Governance: The governance component of ESG looks at how an organisation manages itself or is governed. This pillar is fundamentally all about trust. For example: Can investors have faith that a corporation will fulfil its commitments? Are the board’s and the C-Suite’s objectives consistent with those of the company’s customers, employees, and shareholders? Do workers feel that their workplace is fair and safe? & even actions like paying Corporate Taxes on time & complying with governmental & local regulations.
The governance pillar is essential since it establishes the standard for how the company will function. By ensuring that a company is operated ethically and with integrity, good governance practises can boost revenues, reduce risks, and foster better connections with stakeholders including customers, employees, and other stakeholders.
ESG – Need Of The Hour In Facility Management Industry?
The Integrated Facility Management Industry in India has witnessed strong growth over the past few years, jolted by the improved focus on building resilience against COVID-19 pandemic. Moving forward, the facility management market is projected to grow at a CAGR rate of 23% from 2021 to 2026, according to IMARC Group.
Today, sustainability is inextricably linked to business strategy, enabling businesses to address issues that the world is making a rallying cry for. These issues include climate change, income inequality, depletion of natural resources, human rights issues, fair working conditions, pollution, racial injustice, and gender inequality. Irrespective of how counterintuitive it may seem, the most sustainable business is often found the most profitable business.
The sustainable, moral, and ethical efforts of a business can be measured using Environment, Social, and Corporate Governance (ESG) metrics, which rank on top of the agenda of businesses today. Since 2005 when the term was first coined, ESG has emerged as an investment criterion where companies prefer to work with the partners that strive to make the world a better place.
ESG Implications In IFM Scenario
Environment; limits harmful pollutants and chemicals, seeks to lower greenhouse gas emissions, uses renewable energy sources
Social; companies that operate an ethical supply chain, supports LGBTQ rights and encourages diversity, has policies to protect against sexual misconduct, pays fair wages
Governance; companies that embrace diversity on their board, embraces corporate transparency, employs a CEO independent of the board chair
Futurescape’s 2021 study of India’s Top Companies for Sustainability showed that around 80% of 100 top companies incorporate SDGs into their responsible business actions. IT and Telecom sectors lead the way where 75% and more companies have adopted the UN’s Sustainable Development Goals, laid out their specific ESG goals as per SDG practical framework, and embarked on their ESG journey.
ESG’s Significance in India’s Facility Management Landscape
a. Pre-qualification requirement for FM suppliers: As one of the leading FM services providers in India, Tenon FM has noticed a change in the pre-qualification assessment of FM services providers; organisations require FMs to provide additional information on; environmental issues such as their take on water management, waste and pollution, resource depletion, greenhouse gas (GHG) emissions, deforestation, and climate change; social factors such as how a company treats people and focuses on employee relations and diversity, working conditions, local communities, health and safety, and; governance factors such as tax strategy, executive remuneration, donations, and political lobbying, corruption and bribery, and board diversity and structure.
b. Delivering on ESG requires FM’s commitment toward sustainability: A McKinsey analysis of more than 2,000 studies found that ESG-focused companies drove positive equity returns 63 percent of the time and only experienced negative returns eight percent of the time. However, the ESG journey is not as easy as it seems prima facie. Now when BRSR reporting has been made mandatory by SEBI from FY 2022-23, businesses must ensure that fair ESG practices are being followed from top to bottom of the supply chain. For example, FM companies pursuing ESG initiatives must report to the customers on their fair labour practices, eco-friendly chemicals being used, waste management practices, and their carbon or plastic footprint with utmost transparency. Both the FM consumer and service provider should then acknowledge the scope of improvement and provide a roadmap for change.
c.. Building cross-functional teams to achieve common goals:
- Attract ESG funding
- Get LEED certification
- Maintain healthier indoor quality
- Minimise business impact on the environment
- Create more employment opportunities for talents in rural areas of India
- Reduce costs in terms of building development, operations, and maintenance
- Attract talent through greater social credibility
- Install new-age smart and intelligent technology
- Boost employee motivation by creating productive workplace
How Is Tenon Addressing ESG Priorities Into Its Operations?
- Environmental
Energy Usage and Efficiency: Replacement of CFLs with LEDs, which will not only help reduce energy consumption but will also have the indirect effect of reducing air-conditioning costs since CFLs emit more heat compared to LEDs. Energy costs are reduced in more than one way. It also helped in the reduction of air conditioning costs, as CFLs emit more heat than LEDs. We have sensor-based lights across all offices, which turn on once the person enters and turn off when the person exits. This saves energy consumption and costs too.
Waste Reduction: Introducing the concept of recycling paper waste on our office premises in June 2022. We have placed a desk-side recycling bin on each table. Thus far, 1.5 tonnes of paper waste have been recycled, which is helping to reduce greenhouse emissions. And as we all know, it takes 70% less energy and water to recycle paper than to create new paper. Net zero, carbon neutrality and a plastic-free culture are all possible if we go beyond simply teaming up with clients or vendors.
Carbon Footprint Reduction: We took a pledge that by 2030, 30% of our vehicle fleets would be electric. We are trying to replace all of our diesel cars with electric ones. As there will be zero tailpipe emissions, it will help reduce our carbon footprint. Tenon FM has teamed up with a non-profit group called Sankalptaru, through which we are now planting 100 trees for every new customer we sign up; this is a documented occurrence. Keeping a track of how well the trees develop and, as a result, how much carbon they remove in terms of creating a negative carbon footprint.
Certifications & Ratings: EcoVadis, which provides a holistic sustainability rating service for companies, is delivered via a global cloud-based SaaS platform.It rates a company’s material sustainability effect using extensive documentation analysis based on the pillars of environment, sustainable procurement, and more. Tenon has partnered with EcoVadis. This is the third year they’ve given us a rating, and we’ve gone from a 30% to a 60% rating. Getting to 90% is a journey; if we keep measuring, we can keep improving in small steps.
- ISO 14001:2015- Environmental Management Systems is intended for use by an organisation seeking to manage its environmental responsibilities in a systematic manner that contributes to the environmental pillar of sustainability
- ISO 45001 – 2018- Occupational Health & Safety Management System which is intended to improve the safety and health of both employees and other personnel. ISO 45001 helps provide new impetus for occupational health and safety practices in organisations and also helps to improve safety for employees and contractors.
2. Social
Fair Pay and Living Wages – We adhere to the minimum wage regulations universally, including our UK & Singapore businesses
Equal Employment Opportunity – 30 % our workforce in FM & around 15% in Security are Females & we are striving to enhance the numbers
Employee Benefits – Benevolent Fund, Comprehensive Health Insurance for employees, Accidental Life Cover for the field staff
Workplace Health and Safety – Women Safety Protocols at office, P.O.S.H policy, Fire Safety Complaint Offices, 24/7 Surveillance for safety
Community Engagement- Tree plantations, PAN – India , Members of CAPSI & ASIS
Responsible Supply Chain Partnerships – Vendor Selection SOPs implemented
Adhering to Labour Laws – Minimum Wages, PSARA Act compliance
Companies that operate an ethical supply chain
Supports LGBTQ rights and encourages diversity
We strictly believe in equal pay offering our employees all the regulated employee benefits. Believing in the concept of gender equality and equal employee opportunity, we enrolled 5 transgender and physically handicapped candidates in our system last year, and this year it went to 150+.
3. Governance
Vendor/Employee code of conduct – Policies & SOP by commercial department
Whistleblower procedures and system
Formalisation of board and various other committee as per below
- Board
- Audit
- Risk Management
- ESG Committee
Investment in systems and processes
- Various tool integration for governance
- Strong policy implementation
- Invest in strong governance
- Hiring of external agency
Investment in know-how
- Hiring of Consultants
- Hiring of Auditors
- Certifications (Ex. GPTW, Management certification)
Author: Angad Rajain, Global CSO & IFM Head, Tenon Group
