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The corporate sector has seen its fair share of movements when it comes to taking accountability, From the greenwashing outrage to the uproar on the prevalence of non-inclusive workspaces, nothing seems to have stuck. So when Environmental Social and Government (ESG) guidelines came into the picture, the industry had similar expectations. But today, they have made a space of their own in the corporate sector, tossing away the notion that they are just a fad. Currently, it is at the heart of every decision made by the government, large businesses and even industry bodies. This is especially true as we come down from the devastation caused by the COVID-19 pandemic and are living in a landscape where brands are now more than ever trying to prove that they are actively contributing to the health of the environment and taking ownership. But why are organizations facing this pressure now more than ever?
That pressure for organizations to adhere to ESGs is being felt from a multitude of directions. A study by KPMG highlighted that the current generation wants to deal with ethical businesses that are concerned about climate change, economic and social disparity and sustainability.
Additionally, Bloomberg reported a record $120 billion invested sustainably in 2021! [ Bloomberg] All of this is happening on the back of federal and state regulators increasingly requiring organizations to comply with stringent ESG-related targets - ranging from carbon emissions to gender-equal pay.
This is a precedented change where organizations are stepping up and taking responsibility to solve the urgent and significant environmental, social and ethical challenges humanity is facing. So let us delve a little deeper to understand how the manufacturing industry in particular can benefit and reshape itself through ESGs.
The need of the hour for the manufacturing sector is a shift towards sustainability to center on capturing long-term value for not only shareholders but all stakeholders.
It is on the back of making this shift in perspective that ESG frameworks are gaining traction within the manufacturing sector today. ESGs in the manufacturing sector particularly include areas such as inequality, climate risk, quality, safety, diversity, and ethics, which are factors that can put companies at risk and affect their bottom line. Since they're addressing crucial issues that are plaguing every company in the manufacturing space, the question that demands inquiry is - how extensive is the utility of ESGs in the manufacturing industry?
1. Higher ratings, higher profitability: Research links high ESG ratings with higher profitability, higher dividend yield and decreased business risks, less volatility, and higher valuations. Higher ESGs ratings can indicate better management of risk and opportunities by companies.
2. Transparency and accountability: Buyers want more information about ESG goals than ever before, and not just from a sustainability standpoint. Transparency in ESG practices now goes hand-in-hand with businesses giving consumers basic product and manufacturing information and as mentioned above, it holds the power to sway consumer decisions. Brands are motivated by a better knowledge of environmental risks and the desire to please discerning customers.
3. Talent pool: A recent study from the Society for Human Resource Management found that 94% of next-gen workers want to use their skills to benefit a cause. Manufacturers that focus on sustainability and ESG initiatives not only help the planet but attract better talent through their approach.
While many organizations in the manufacturing space are now making the move toward ESGs, the Runaya group has been created with the vision to excel through our ESG initiatives. With a multi-faceted approach, we have ensured that all business functions operate with our ESG frameworks. Minova International and Runaya Group have formed a joint venture to bring cutting-edge technology solutions to Indian and international mining and infrastructure sectors, providing ground support products to our partners to ensure a much higher degree of safety. Additionally, 40% of Runaya's operations are powered by renewable power and solar power, with the goal to become 100% solar power or wind power based soon! Even on the product front, Runaya's Briquettes have only 60 kg of carbon footprint whereas typically, a Briquette takes produces 600 kg of carbon footprint while manufacturing. But to adhere to a mission of complete decarbonisation, the Briquettes manufactured by Runaya will be 100% carbon emission-free within a few months!
But for a company to prosper over time, it must not only deliver financial performance but also make a positive contribution to society.
One of the main building blocks of the Runaya Group was a build a diverse and inclusive workforce from the ground up. Currently, Runaya has more than 60% women in the direct workforce and about 45% women in the indirect workforce. We recently kicked off our plans to onboard more employees from the LGBTQIA+ communities to strengthen and promote an inclusive work culture within the organisation and into its supply chain through partners.
To promote geographical diversity and disability inclusion, we have also hired employees from across Jammu and Kashmir, Mizoram and Tripura in all offices, and have welcomed especially abled into our workforce full-time!
It is safe to say that the importance of environmental, social, and governance (ESG) and sustainability programs have reached a tipping point for industrial organisations. Businesses can become absorbed with the here and now. ESG, on the other hand, seeks to meet current demands without jeopardising future ones. And in the words of our CEO and co-founder, Annanya Agarwal, “Brands embracing ESG in business will truly create a sustainable world!”