The Business Revolution Episode 12

In this episode, we delve into the “E” of ESG (Environmental, Social, and Governance), focusing on the environmental aspects and their growing importance in the business world. We demystify the ESG framework, explaining how it helps stakeholders understand an organization’s sustainability risks and opportunities.

The discussion covers:

• Businesses that adapt quickly, embrace innovation, and stay ahead of regulations can turn ESG into an opportunity for growth and resilience.

• What “E” entails – greenhouse gas emissions, waste management, natural resource stewardship, and resilience against climate risks.

• The evolution of ESG from EHS (Environment, Health, and Safety) in the 1980s to corporate sustainability in the 1990s and CSR (Corporate Social Responsibility) in the 2000s, leading to the comprehensive ESG framework we see today.

• The urgency of climate action and the need for immediate action to address climate change, urging business leaders to phase out fossil fuels and embrace renewable energy.

• Practical steps for businesses to Assess climate-related risks, reduce carbon emissions, adopting circular economy practices, and managing resources sustainably.

• The role of technology and innovation – the importance of clean technologies, green innovation, and the use of AI and blockchain in ESG reporting.

• The changing regulatory landscape and the increasing number of environmental regulations.

• The relevance of ESG in 2025, its continued importance as an investment trend, despite regional differences and challenges.

• Employee engagement and the importance of engaging your employees in your environmental and sustainability goals.

Audio version:

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Bios in brief:

Mik Aidt
Mik has been a highly influential player with respect to our environment, with very active communications experience for over 10 years. Examples include playing a very significant part in the global ‘Climate Emergency Declaration’ movement, and long-lived podcasts.

Cherry Ward
Cherry is a seasoned leadership development expert, coach (ICF ACC), and advisor with over two decades of experience in the corporate world. She is also the founder of Bluebird Leadership, a boutique consulting firm pioneering innovative solutions that cultivate thriving leaders, teams, cultures, and a sustainable planet.

Alan Taylor
Alan has moved from corporate IT consulting into this domain because he adamantly believes that humans need to adapt, businesses can benefit from this new revolution and therefore he is determined to help it happen. Alan is an accredited coach (ICF ACC), supporting leaders and teams in personal and leadership development and transformation.

Episode 12 links

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🎧 𝐓𝐁𝐑 episode 12 for download: audio mp3

🎧 𝐒𝐩𝐨𝐭𝐢𝐟𝐲: open.spotify.com/episode

🎧 𝐀𝐩𝐩𝐥𝐞 𝐏𝐨𝐝𝐜𝐚𝐬𝐭: podcasts.apple.com

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Transcript – episode 12

Cherry Ward (00:00)

Welcome or welcome back to the business revolution, the podcast where we’re rewriting the rules of business for a sustainable future. I’m Cherry, your co host.

Alan Taylor (00:09)

And I’m Alan.

Mik Aidt (00:10)

And I’m Mik. We are your guides on this journey to explore the intersection of business, sustainability and positive change.

Alan Taylor (00:18)

And in each episode, are bringing inspirational conversations with experts, entrepreneurs, and change makers who are proving that sustainability isn’t just good for the planet, it’s actually good for business.

Cherry Ward (00:28)

We will uncover innovative solutions, share practical strategies, and discover the new trends that will shape the future of sustainable business.

Mik Aidt (00:37)

So whether you are a seasoned CEO or an entrepreneur or simply curious about how to make a difference, you’ve come to the right place.

Alan Taylor (00:46)

So grab a cup of your favorite brew, settle in, and get ready to be inspired. This is the business revolution.

Cherry Ward (00:52)

So this episode is just the three of us and we have a special three part series on ESG, environmental, social and governance. You may have heard of us referring to ESG many times throughout the various episodes on this podcast. So we want to demystify this acronym.

Alan Taylor (01:10)

So what is ESG? Well, ESG is essentially a framework which helps, and this is an important bit, help stakeholders understand how an organisation manages risks and opportunities around sustainability issues.

And starting with the E, the environment, environmental factors refer to an organisation’s environmental impacts and risk management practices. That sounds all big and complicated, but these include directly and indirectly all of the things that a business creates or has an impact on. They include things like greenhouse gas emissions, waste management and pollution, management stewardship over natural resources.

That means its impact on things like biodiversity, trees, all those sorts of things. And quite often, they’re not as obvious. You’re not as avoided from that as you might think. So please listen on.

You’ll hear more as we talk through, because this has an impact also on the firm’s overall resilience against physical climate risks, like climate change, flooding, and fires. But there’s more than that. The thing is, all of these things impact the business indirectly as well. As the politics and the things around the world are changing, the environment is very broad reaching.

Cherry Ward (02:17)

Then there’s the social pillar, which refers to the organisation’s relationship with all of its stakeholders. Examples include human capital management metrics, so things like fair wages, employee engagement, employee wellbeing, but also an organisation’s impact on communities in which it operates. And a hallmark of ESG is how social impact expectations have extended outside the walls of a company, to its supply chain partners, and particularly in those developing countries where environmental and social labor standards may be less robust.

Mik Aidt (02:54)

And then there’s the G, which stands for governance. Governance in a corporation, that’s about how a CEO, how the management leads and takes the organisation to a new place. You could say, ESG analysts will seek to understand.

For instance, how leadership incentives are aligned with stakeholders’ expectations, how shareholder rights are viewed and honored, and what types of internal controls exist in the company to promote transparency and accountability on the part of leadership. And I think that’s a very important word when we talk about the G accountability.

So that was just a brief on what is the E, what is the S, and what is the G. But how did it all come about, this ESG thing?

We’ve created a little course, and when I say we, in that context, it’s a company from Denmark. A good friend of mine has a company called Kelsa Media, and together with a friend here in Geelong, where I am based, we run a company called Geelong Media.

So it’s a collaboration between Geelong Media and Kelsa Media that stands behind producing these small courses about different topics. We talk about cybersecurity, we talk about personal data protection, and we have started a new series about ESG, which is all about getting the employees in tune with what does this mean? So the first course we have in that series is simply called An Introduction to ESG.

And in that course, we have just a little explanation about how did ESG come about, where did it all start? And it goes like this.

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Cherry Ward (04:27)

The concept of ESG has evolved over several decades. We may have heard of EHS, environment, health and safety in the 80s, which is still around, corporate sustainability in the 90s, CSR, which is corporate social responsibility.

And there’s been several iterations, which has broadened the scope of how businesses consider their impact on the environment, society, and the wider stakeholders. So while early approaches were often reactive or used for marketing purposes, greenwashing, ESG has emerged as a more proactive and a comprehensive framework, which encompasses environmental and social impact, as well as governance structures, how a company goes about governing you know, it’s ethical decision making and so on that prioritises stakeholder wellbeing as a fundamental basis.

Alan Taylor (05:21)

Just adding into that is, there’s a common perception that the stakeholders or the people around are not actually that bothered. And there’s a few cases in the last couple of years where the big Australian business people have gone, I don’t think that’s true. And they’ve upset the apple cart. This happened in particular with AGL.

Mike Cannon-Brooks attempted a takeover and you can see that what happened then was the shareholders who had previously been believing, know, everybody believed was not interested when actually, yeah, this is important. And they had a very big shift in the organisation over the next two years. So that gives you an idea that sometimes what we perceive and what is reality are not the same.

Mik Aidt (05:59)

So let’s get even deeper into what the E in ESG means. And as we have already mentioned a couple of times, there’s a lot of climate change in there. It does have a lot to do with what’s happening to our atmosphere, the extreme weather events, and so on.

So we’ve put another little video together. And when I say we here, it’s us, the business revolution, where we are trying to convince or we’re going to show you why we think business leaders need to pay attention here when it comes to getting into ESG.

———————————————————–

Video (06:29)

Thank you for taking the time to listen. I know your schedules are packed. You run businesses, you make decisions that shape industries, and many of you have been hearing about climate change for decades. Perhaps you’ve even taken steps to address it. But let me make one thing crystal clear. We are out of time for half measures.

For nearly four decades, scientists have warned that human-caused climate change was accelerating. Every major prediction has come true, faster and with greater severity than expected. And yet year after year we have failed to course correct at the speed science demands.

I am not here to tell you that you alone can stop climate change. But I am here to tell you that as business leaders you hold more power than most governments. While policy makers argue and delay, industries act. The choices you make, what energy you buy, what materials you source, what supply chains you build, send ripples through the entire economy.

Right now we are at a turning point. The window for limiting global warming to a livable level is closing. 2024 marked the first year in human history that global temperatures temporarily exceeded 1.5 degrees Celsius above pre-industrial levels. This is no longer a distant warning, it is our present reality.

And as we have seen, that means more extreme weather, supply chain disruptions, food insecurity and economic instability, threats that will not only harm people but your businesses as well.

But here’s the good news. We know exactly what to do. We need to phase out fossil fuels quickly. That means electrifying everything possible, sourcing power from renewables, investing in efficiency and pushing for carbon pricing policies that make polluters pay for the damage they cause.

And yes, that means rethinking business models. Not in 10 years. Not in 5. Now. I know this is not easy. Change never is. But let me be blunt. If your industry continues to rely on fossil fuels, if net zero remains a distant goal instead of an immediate priority, you are betting against the future. You are betting against your own children and grandchildren.

There is no time for greenwashing. No time for empty commitments. You are decision makers. So decide, will you be part of the problem or part of the solution? The next decade will define what kind of world we leave behind. Be on the right side of history.

We stopped the burning, we found a better way…it’s both cheaper and cleaner…

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Mik Aidt (09:31)

So obviously, as was expressed in this letter or speech, greenhouse gases is the number one and electrifying your business. But it’s also about getting prepared for what’s coming, adapting to the physical impacts, the extreme weather events that are already here and certainly are impacting businesses in so many ways as we’re already seeing. If you go into the supermarket, there’s suddenly empty shelves here and there.

And that’s a direct result of climate change. So it’s about how can we get prepared and we need to get our employees involved as well in that preparing and thinking about the risks, the climate related risks that are ahead of us, but also the opportunities that are in this change that’s happening globally. And what are the most effective strategies for reducing our carbon emissions very quickly?

And how can we as a business contribute to that transition to a low carbon economy as what we’re talking about?

Cherry Ward (10:27)

And some of the questions that businesses can ask themselves as they plan and go through their strategy sessions and off sites and alike is, how can we assess our climate related risk and opportunities? What are some of the most effective strategies for reducing carbon emissions?

Even things like, I know there’s this big debate around return to office mandates. Has anyone actually measured the carbon footprint of people returning to the office? Whether they’re driving, commuting, how they’re commuting, et cetera. So I think there’s a lot of ways and I think it’s thinking outside the box. How can businesses, how can we as an organisation contribute to a low carbon economy? And it’s thinking about those different scopes and emissions. We won’t get too technical here, but it’s more than just the direct carbon emissions.

Alan Taylor (11:14)

And so it’s about adapting to a lot of this. As Mick touched on, some of these things can be low hanging fruit and quick savings. And even that isn’t as unbelievable as it might be. We had a speaker on the podcast a few months ago who was talking about how moving homes and small businesses to electric can save money immediately because of the various funding options that are available as well as the long-term benefits from electrification.

You’ve got that sort of savings that come through how we think about our impact on the environment and water. Well, if you’re using less water, you’ve got less cost of buying as much. It’s the same with all of our other events and actions.

Cherry Ward (11:50)

The other aspect of environment is.. the resource management. So organisations to think about, are we using resources, water, land, forest, et cetera, sustainably? What’s our waste management practices? And are we looking at how can we adopt circular economy thinking and practices into the business, as well as pollution prevention and control, and then also biodiversity conservation.

Alan Taylor (12:15)

Waste management is another easy, quick win. By managing the waste properly in your building, obviously it depends on your building structure. You might have to talk to a building manager around doing this in a big corporate shared building. if you’ve reduced the actual landfill and put more into recycling, that actually reduces your waste management bills as well as having an impact on the environment. So some of these other quick wins you can have can be really powerful.

Cherry Ward (12:40)

Absolutely, Alan There’s one organisation that I used to work for and they did this 15 years ago. There was a mixed use building. So by mixed use, I mean, you’ve got, you know, say retail, commercial, residential, and they were using the air conditioning heat from the retail shopping center underneath to heat the pool for the residential complex. So it doesn’t have to be overly complicated. It’s just thinking about how can we divert that waste into an energy source?

Alan Taylor (13:09)

It’s a beautiful example of where it’s about thinking differently and how we approach these things. Because for that, it wasn’t a me or you. The example you just used there, Cherry it’s like, you’ve got this conversation that’s got to be had. Well, we’ve got a pool, we’ve got some excess heat. How can we help each other and not be, it’s just all about me. And that’s been happening in other areas with resource management.

Perfect example is a lot of the councils around the country or water management and waste management now using that for bioenergy. I’m thinking, how can they put that same waste to create heat, to actually create power? These are where, hang on a minute, shouldn’t these be separate utilities? No. Let’s complement each other and support that system that we need.

Mik Aidt (13:50)

On top of everything that we’ve talked about here is of course that the landscape of law and legislation is changing quickly. Governments are actually beginning to wake up to this. And I think in particular in the EU, we’re seeing new laws that are like even like shocking in terms of how much European companies now have to report on and be compliant with and so on. There are 1200 different things that they have to get their minds set in on acting on. And that will come to Australia just as well. And it is coming already. We’ve seen some new legislation here by January and more will be rolling out in the months and years to come. So that’s an aspect as well that, you know, every business need to, you know, get aligned with in many ways. And there’s a lot to look into there and a lot to learn.

Alan Taylor (14:41)

Yeah, and I think this is another thing we can share, especially for the listeners who are in Melbourne, we’ve got an event in just a few weeks on the 26th of March, where we’ve got experts from finance, actual from industry and doing manufacturing, and actually helping with the measures and all the things we’ve talked about, where you can actually start to understand where the benefits are, how it all fits together. Because quite often we look at each of these aspects in silos, and the governance it’s almost like an anchor that can pull those things together in a positive way to help actually drive that change.

Mik Aidt (15:13)

This is important. How can businesses ensure that they are compliant with all these environmental regulations? But also how can businesses engage with stakeholders on these issues?

Alan Taylor (15:23)

And better still, engage with your employees at the moment. Obviously we’re almost branching into the social world. This is how they interweave. When you’ve got employees who are engaged at a time where we talk about quiet quitting and various other behavioural patterns in the workplace, if you engage people and make them actually feel part of the solution, that’s been proven to be a very big motivator and people in your organisation. So, the beauty of the crowd.

Mik Aidt (15:49)

And that’s the whole, exactly and that’s the whole positive story of the green transition, which is how fast technology is actually developing. It’s almost every day we hear about a new invention as something that has become faster and better or cheaper and so on. So technology is moving very, very fast. And it’s also about, you know, that businesses, of course, you take advantage of that.

Cherry Ward (16:10)

Yeah, absolutely. That innovation and technology is a crucial part of the E. So what are some of the clean technologies that your businesses can adopt? Again, thinking innovatively about that, even the way the investment landscape in ESG is changing.

There’s one company I can think of is called Lower Carbon Capital, and they only invest in technology that is focused on lowering carbon emissions. And they’re a huge private equity firm, investing in new startups. So thinking about that green innovation and sustainable product development, there are countless new startups emerging, looking at the role of technology in environmental management.

Alan Taylor (16:56)

And building on that is when you can get involved in change… back to a point that was made a bit ago, you know, change can be quite daunting for people, but when you actually put them on the bus and be the drivers of that bus, then it becomes a motivator in doing this.

And that’s one of the things, for example, Cherry and I are involved in with a group called Net Zero Map. This is a global research group, which we’ve proven that actually doing that not only helps increase motivation, it’s actually increased the ability to think outside the box.

And when you weave that into your own business, when you’ve got that ability that can be used, motivated around that, that’s a reusable skill and capability that can drive your whole business capabilities outside of just the sustainability. So this is potential benefits all around.

Mik Aidt (17:32)

This is absolutely key because you know, really what makes a business thrive is the joy of the employees. You know, that the employees are engaged and feel, when they come to work, they feel happy, they feel engaged, they feel that this is exciting. That’s really what drives a business forward.

Alan Taylor (17:53)

And that’s why I love this fact that this is actually beyond the compliance. You can use the compliance almost more like a suite rather than a stick because you can use the measures that you can put in place can be actually really good motivators.

You can say, Hey guys, this is what we’ve done. We have done. And when you bring that narrative is that we have been part of it. You have been part of this. That engages your stakeholders and engages as a good stories to tell to your clients. And that builds across.

You look at some of the companies like Patagonia that have actually used that as part of their branding. They didn’t used to be in this space. They’ve adapted and brought it into their culture. And it’s a big win.

Mik Aidt (18:29)

And that whole thing we talked about, accountability. It actually feels great to be accountable. It actually feels great when you’re showing the benefits of what you’re doing and that you are a responsible adult taking responsibility in the world we live in. That feels great at all levels.

Cherry Ward (18:46)

But one thing that’s been on my mind, and I’m sure it’s on a lot of our listeners as well as business leaders is thinking about, well, is ESG still relevant in 2025? I know we discussed earlier about the evolution. I think it’s just a slightly different acronym. I think it’s more of an amalgamated view of how an organisation should have ethical practices and have good governance.

The future of ESG in 2025 is, it can be, you may think it’s uncertain. It’s politically charged. We know that, you know, there’s, in some regions like the US there’s some backlash. However, my view is that ESG is still a strong investment trend globally. You know, there’s a lot of data around.

If you think about superannuation in Australia, the 401k funds in the US, any kind of retirement funds, they’re all investing in green technology like renewables because the return on investment over the long term is huge. It outperforms other assets or stocks. And here are some key sort of predictions from the Corporate Governance Institute.

Alan Taylor (19:54)

There’s some great predictions, they include the deepening regional divides, that there’s a gap between pro-ESG and anti-ESG regions. I think anybody watching world politics at the moment is seeing that, and that’s widening. They’re seeing that there’s an increased need for ESG expertise. Now there’s an interesting one. You can see these contradictions in here almost, but we’re going to need it because companies still need to upskill in a matter that’s stricter for transparency and reporting requirements, even if that’s only for certain regions.

Now, if you’re an exporter to Europe, for example, or want to be an exporter to Europe, you’re going to need to do this. Plus, course, Australian regulations started, the 1st of January.

Technology is driving ESG reporting. AI and blockchain will revolutionise ESG data collection and analysis. And then, of course, you’ve got to battle with the hushing in the US. Companies in the US may become quieter around their ESG efforts to avoid political backlash, but there’s also a big push for a lot of this in the US still in a lot of the states.

So it’s this very regional and there’s still a rise of corporate activism. There’s this polarized view on ESG. It’s going to lead to increased investor activism. We’ve already starting to see this. I mentioned a case, an example earlier with, with AGL in Australia. So this is how it’s sort of going to go. It’s a bit messy, but it’s definitely moving in that direction.

Cherry Ward (21:14)

Absolutely. I think the story of ESG is being written in real time. You know, we won’t know what happens, you know, at the end of 2025, where we’ll be but whilst, you know, Alan spoke about the lie, the loud political pushback in the media.

And you contrast that with what’s happening actually in investment in terms of dollars, you know, and where investors are putting their money, which is into, you know, companies that are focused on ESG, renewable tech and so on. So I think despite all of these challenges, businesses that can adapt quickly, can embrace innovation and stay ahead of regulations can… they can turn ESG into an opportunity for growth and resilience.

Alan Taylor (21:57)

And they’re not just a few companies. Last year, 2024, the actual investment in environment, and obviously we’re talking environmental here, environmental investment. I haven’t got the figures off the top of my head, but they have been the highest. They’ve continued growing. Even at the end of 2024, they slowed down a bit, but they haven’t stopped. And so, yeah, this is not going to go away for sure.

Mik Aidt (22:18)

This was all we could sort of talk about the E in such a short time that we have in our episodes of the Business Revolution. But of course, there’s a lot more to say and we’ll put that out in our notes on the website, businessrevolution.earth. And including, for instance, that introduction course that I talked about, the E learning course for employees about ESG and other things that we have talked about in the 20 minutes that we’ve been talking.

Alan Taylor (22:47)

So that’s a wrap for this episode of the Business Revolution. We hope you enjoyed diving deep into the world of business and sustainability.

Cherry Ward (22:54)

Remember that the revolution doesn’t end here. It’s up to each and every one of us to take this knowledge and inspiration from today’s episode and turn it into action.

Mik Aidt (23:04)

Whether it’s implementing sustainable practices in your own business or advocating for change in your community, it all comes together. It all matters. It all steps towards building a better future for us all.

Alan Taylor (23:17)

And don’t forget to visit our website, businessrevolution.earth, for more resources, past episodes, and ways to get involved.

Cherry Ward (23:24)

And if you’ve enjoyed today’s episode, be sure to subscribe and rate and review the business revolution from your favorite podcast platform. Your feedback does help us reach more listeners and also amplify our impact.

Mik Aidt (23:38)

So stay tuned. The business revolution will be back with more insights and inspiration and actionable steps for you. How we reshape our world.

Cherry Ward (23:46)

Until next time, keep innovating, keep inspiring yourself and others and keep pushing for positive change for a brighter tomorrow. This is Cherry.

Mik Aidt (23:55)

Mik.

Alan Taylor (23:55)

And Alan signing off. The business revolution starts with you.