What is ESG?
ESG stands for "Environmental, Social, and Governance." ESG is a holistic concept that advances the idea that the quest for sustainability extends beyond environmental concerns. ESG reporting provides stakeholders (investors, employees, customers, and suppliers) with a framework for managing risk. It also identifies opportunities for improvement. Companies that embrace ESG compliance and implement a comprehensive ESG strategy may see improved financial performance and boost operating profits by 60%.
ESG Components
ESG's 'environmental' component addresses adverse environmental impacts by citing what an organization is doing to mitigate current or potential impacts.
Examples include:
- Greenhouse gas emissions (both direct and indirect impacts)
- Stewardship over natural resources
- Organizational resilience in the face of climate change, fires, and flooding
The 'social' component speaks to an enterprise's relationship with every stakeholder category. For example, when it comes to employees, are wages fair? And does management engage with workers to an appropriate degree? What is a company's impact on the community in which it operates? What is the relationship with its supply chain partners? This is of particular interest where environmental and labor standards are inadequate.
'Governance' refers to an organization's leadership and management. How well does an organization's leadership align with shareholder rights? How well does it align with stakeholder expectations? Are there internal controls fostering transparency and accountability?
ESG represents a confluence of important considerations:
- Pollution and waste reduction
- Safety compliance
- Health issues
- Corporate philanthropy
Increasingly, stakeholders want to view an organization through ESG optics. ESG reporting helps an enterprise adapt amid changing social, economic, and environmental conditions.
The Evolution of ESG
Today's focus on ecological, social, and governance is the product of a decades-long evolution.
The Environmental, Health, and Safety (EHS) movement dates to the 1980s. Enterprises increasingly assessed labor and safety standards via vis economic growth.
In the 1990s, the Corporate Sustainability movement extended the reach of EHG. Management opted to go beyond what environmental regulations demanded.
Unfortunately, this effort occasionally devolved into a marketing tool that overstated ecological accomplishments. Some called it greenwashing.
In the early 2000s, the Corporate Social Sustainability (CSR) movement increased its focus on responding to the social issues of the day. Corporate philanthropy was one key component, while volunteerism was another. By the late 2010s, Environmental, Social, and Governance (ESG) emerged as more of a proactive rather than reactive movement.
Credit the investment community for some of ESG's emergence. Reporting frameworks and rating agencies use it to deliver the transparency investors seek. Sometimes, ESG serves to enhance access to capital markets. Publicly-traded ESG investment vehicles help investors better align their values with their investments. These include everything from green bonds to ETFs and from mutual funds to index funds.
For example, ESG reporting has the support of the "Big Three," BlackRock, Vanguard, and State Street. For example, BlackRock wants to see the use of two popular ESG frameworks - SASB and TCFD in order to allow BlackRock to manage ESG risk within its portfolio.
Meanwhile, both Vanguard and State Street have discussed their support of ESG investments and the use of the SASB and TCFD frameworks. State Street's R-Factor score is based on the SASB framework. ESG reporting is still mostly market-led. While not yet required at the federal level, that may change soon. In Europe, there's already a requirement that investment funds be classified as ESG or non-ESG.
In any case, ESG is here to stay. More than seven out of ten CEOs see it as their responsibility to align ESG policies with customer values. By 2024, Deloitte estimates that ESG mandated assets will total $35 trillion - about half of all professionally managed investments.
Waste & Recycling
A key element of a company's ESG success is its commitment to sustainability. Waste reduction and recycling efforts make a significant contribution. And acquiring accurate, quantifiable waste and recycling data is essential.
Waste Optimization
Optimize waste management by developing and enforcing a comprehensive plan.
How to Implement a Recycling & Waste Management Plan
Recycling and waste management plans save money, time, and the environment. For example, plans streamline processes like the deployment and collection of waste containers.
Features include:
- Identification of the types of waste produced, including hazardous waste, if applicable
- Identification of parties responsible for waste handling and recordkeeping
- Discussion of methods for measuring waste
- Effectively track or estimate waste volumes as accurately as possible
- Waste management method for each type - storage, reuse, recycling, recovery, disposal
- Maintenance of records pertaining to volumes, management, and collections
When there is a competent, comprehensive plan, significant benefits accrue. Monitoring waste volumes enhance waste reduction strategies and foster effective recycling and reuse practices. This way, waste gets processed more effectively. Material recovery and reuse save money, while landfill disposal can be costly and less sustainable.
ESG Waste Regulations
Now more than ever, organizations and responsible parties are aware of the impact of waste on our air, surface water, and groundwater. ESG waste regulations serve to protect irreplaceable parts of our environment.
EPA & Resource Conservation and Recovery Act (RCRA) Regulations
The Resource and Conservation Recovery Act (RCRA) of 1976 (42 USC 56901 et seq. (1976)) amended the Solid Waste Disposal Act of 1965. The RCRA is the primary law regarding solid and hazardous waste disposal.
The RCRA established national goals for:
- Reducing waste generation
- Protecting people and the environment from waste disposal hazards
- Environmentally sound waste management
- Conservation of natural resources, including energy
The 1984 Federal Hazardous and Solid Waste Amendments (HSWA) increased the EPA's enforcement authority by setting more stringent standards for hazardous waste management. It also made the UST program more comprehensive. The HSWA helps to minimize waste by phasing out hazardous waste landfill disposal.
Hazardous Waste
The EPA's Hazardous Waste Program (RCRA Subtitle C) sets standards for controlling the hazardous waste, addressing everything from waste generation to disposal.
Regulations impact facilities involved in every aspect of hazardous waste generation. This includes transportation, treatment, storage, and disposal. For example, 40 CFR sec. 262.11 helps companies determine whether specific solid wastes it generates are hazardous. Hazardous waste includes battery acid, mercury, lead, and PCBs. Many cleaners, oils, and solvents are also considered hazardous waste.
- Hazardous Waste exhibits any of these characteristics: toxicity, reactivity, corrosively, or ignitability.
- Reactive Waste is prone to explosion. Or, it may release toxic fumes or vapors in unstable environments.
- Toxic Waste is often harmful or even fatal when ingested or absorbed. It is imperative that toxic chemicals not leach into groundwater.
- Corrosive Waste is either acidic or alkaline. They can eat away at specific materials, especially metal.
- Ignitable Waste is highly flammable. It may even spontaneously combust in specific environments.
The kind and quantity of waste generated to determine a generator's class. There are three primary classifications: Large Quantity Generators (LQGs), Small Quantity Generators (SQGs), and Very Small Quantity Generators (VSQGs).
Every month:
- LQGs generate 1) 1,000+ kg of hazardous waste, 2) one kg of acutely hazardous waste, or 3) 100+ kg of acute spill residue or soil.
- SQGs generate between 100 and 1,000 kg of hazardous waste.
- VSQGs generate 1) less than 100 kg of hazardous waste, 2) less than one kg of acutely hazardous waste, or 3) less than 100 kg of acute spill residue or soil.
First-time generators need to be aware of the rules so they don't run afoul. Consultation with knowledgeable third parties mitigates risk.
Laws and Regulations
Any entity involved with hazardous waste must be familiar with RCRA regulations. The EPA oversees hazardous materials from the moment they are generated to their eventual disposal.
Consult relevant parts of 40 CFR:
- Part 261: Identification and listing of hazardous waste
- Part 262: Standards applicable to generators of hazardous waste
- Part 263: Standards applicable to transporters of hazardous waste
- Parts 264 and 265: Standards for operators of hazardous waste treatment, storage, and disposal facilities
Access more regulatory information through the centralized docket management system at regulations.gov. The Department of Transportation's Pipeline and Hazardous Materials Safety Administration regulates hazardous waste transport.
Some states maintain waste regulations that are more stringent than federal regulations. They may also define hazardous waste more broadly. Consider that Colorado designates aerosol cans as hazardous waste, for example. States may also require generators to file annual or biennial hazardous waste reports.
Compliance
Compliance falls to the EPA and its various regulatory partners. Regulators focus on:
- Hazardous waste identification
- Those who generate hazardous waste
- Those who transport hazardous waste
- Those who treat, store, and/or dispose of hazardous waste
An onsite compliance evaluation inspection (CEI) determines a hazardous waste handler's compliance. This includes consideration of RCRA regulations and permit standards.
The CEI may consist of, but is not limited to:
- Onsite hazardous waste identification
- Identification of units generating, treating, storing, or disposing of hazardous waste
- Review of relevant reports, documents, and on-site plans
Some states adopt RCRA minimums. In other states, regulations may mirror the RCRA but be more stringent in some areas.
For generators, hazardous waste identification is a crucial first step. Compliance requires correct determinations of what is and is not hazardous waste.
Compliance monitoring also involves a review of:
- EPA identification numbers
- Manifesting
- Pre-transport requirements
- Recordkeeping and reporting
Enforcement
State agencies and programs often take responsibility for hazardous waste enforcement. In other instances, the EPA engages in direct enforcement.
Non-Hazardous Waste
The EPA's Solid Waste Program (RCRA Subtitle D) prohibits the open dumping of solid waste. It establishes standards for solid waste disposal facilities, including municipal solid waste landfills. The program requires that states develop plans to manage municipal solid waste. The same applies to nonhazardous industrial solid waste.
Examples of industrial non-hazardous waste may include grinding dust, ash, and sludges. Medical non-hazardous waste may include paper and plastic packaging, cardboard, and office products. Hazardous waste disposal typically costs more than disposing of non-hazardous waste. Accordingly, the proper classification of waste reduces disposal expenses.
However, waste classification is not always straightforward. Waste can be hazardous yet not fall under the same RCRA disposal guidelines. It is also possible for waste to be non-hazardous under the RCRA yet hazardous under stricter state statutes. Some waste, like electronics, may have both hazardous and non-hazardous components.
Laws and Regulations
At the federal level, household, and municipal solid waste are regulated by 40 CFR Part 258. States also have regulations. Consider the State of Illinois as an example. State regulations (35 Ill Adm Code) pertain to landfills and compost facilities. They also address storage/treatment facilities, medical waste, and transfer stations.
Compliance & Enforcement
The U.S. Environmental Protection Agency takes responsibility for non-hazardous waste compliance. So do state EPAs.
GRI 306 Standards
The 300 series of the Global Reporting Initiative pertains to environmental issues. "GRI 306: Waste 2020" establishes waste reporting standards. It is effective for all materials published after January 1, 2022. Sustainability reporting standards guide organizations in reporting their environmental impact and more. GRI 306 is used in conjunction with GRI 101 (Foundation), GRI 103 (Management Approach), and the GRI Standards Glossary.
GRI 306 addresses a wide range of waste-related activities, products, and services. It applies to specific waste sources and waste generated across supply chains. GRI 306 helps an enterprise to understand its responsibility for waste generation better. It also encourages management decisions promoting positive, systemic change.
ESG Waste Data & Reporting
In the United States, only 28% of potential recyclables are actually recycled. However, ESG waste data and reporting are improving on that percentage.
Verifiable, authenticated waste data is essential in ESG reports. Today, ESG scores matter to investors, customers, and the community. An accurate, transparent record of successful recycling and waste diversion efforts can improve one's score. Detailed data and granular reporting are essential in this quest.
Importance of Collecting Waste Data
Regulators and critical stakeholders will increasingly expect data-driven, verifiable disclosures of waste data.
Mitigate process issues, better aggregate information, and get your data out of those isolated silos. Also, employ verifiable waste diversion reports to enhance your ESG initiatives.
Ultimately, it is a form of reporting that makes your enterprise more attractive to employees, customers, shareholders, and investors.
How to Manage & Analyze Waste Data
The correct application makes it possible to manage and analyze waste data. Analyze tonnage trends by content type. Look at compactor haul information, including weight and service date. Access key performance indicators like landfill diversions and overall operational efficiency. Ranking within a portfolio reduces carbon footprints by driving competition among properties.
Optimize results by analyzing critical data, including:
- Equipment type, size, and location
- Commercial service schedules
- Property inspection reports
Sustainability Reporting
Sustainability reports enhance a company's credibility with environmentally-minded customers. They also communicate to employees and shareholders that the organization is forward-looking.
Reports may refer to a variety of standards. For example, the Sustainability Accounting Standards Board (SASB) specializes in providing financial information to investors. Companies often use SASB standards in their ESG reporting.
The Task Force on Climate-Related Financial Disclosures (TCFD) establishes standards for various climate-related disclosures. These inform investment, credit, and insurance decisions. The Climate Disclosure Standards Board (CDSB) provides a framework for providing environmental information in corporate reporting.
The Green Business Bureau (GBB) provides sustainability guides like EcoAssessment and EcoPlanner. GBB initiatives further contribute to substantive ESB reporting. The GBB Green Seal certifies sustainability accomplishments. Finally, ISO 14001 provides yet another framework for reporting environmental performance.
How to Incorporate ESG into Sustainability Reporting
ESG reporting differs from sustainability reporting in two ways. First, it is a broader, more inclusive concept. Second, the two kinds of reporting speak to somewhat different audiences. ESG reporting helps investors evaluate performance and risk. Sustainability focuses more on the interests of customers, employees, and shareholders.
Once ESG data is analyzed, it can be restated for audiences focused on sustainability. This includes employees, customers, investors, and shareholders.
Ensure Compliance: Partner with Keter
Keter Environmental Services delivers turnkey waste and recycling programs to a global constituency. Our end-to-end, data-driven solutions benefit many sectors, including manufacturing, distribution, healthcare, commercial, and construction.
Keter helps clients achieve their ESG and sustainability goals with a new level of confidence.
Our proprietary eTrac application transforms real-time data into actionable insights. Analyze performance indicators critical to evaluating the success of your recycling/waste program and customize reports to better serve your needs. With eTrac, stakeholders enjoy unlimited access to critical metrics, fostering desired transparency.
Keter delivers a dedicated team of professionals with expertise in recycling and waste best practices, helping you improve these programs. Get the actionable and auditable data you need for your modern enterprise.
