By Gina Bremehr, Object Computing President and Chief Operating Officer
As a company, we are investing in the future of ESG. Here’s why.
What is ESG?
ESG stands for Environmental, Social, and Governance.
Environmental Criteria. The impact an organization has on our physical world through consumption and production of energy and waste, among other things. Includes things like carbon emissions, water pollution, and energy consumption.
Social Criteria. The impact an organization has on our society through its relationships and interactions. Includes things like workforce development, fair pay, and diversity and inclusion.
Governance Criteria. The impact an organization has on the local or global environment as a result of its decisions, actions, and how it engages with law or policy. Includes things like antitrust policy, tax policy, and engaging in lawful conduct.
How Does Business Interact With ESG?
Today, many public and fewer private companies have established ESG policies. There is definitely a shift toward companies better understanding how they stack up in each of the E, S, and G categories. There is also increasing interest by consumers, workers, investors, and government to understand how companies are scoring among these criteria.
How Do Market Dynamics Intersect with ESG Policy?
As you dig into the ESG ecosystem, there is no shortage of competing information about whether ESG policy is actually making a positive impact on our world, whether the market for ESG assets (carbon offsets and the like) is contributing to good versus evil, and many other arguments for and against advancing ESG-related considerations.
Without taking a position on the above issues, we at Object Computing believe that consumer access to open and transparent market information (including in the ESG space) is inevitable; and when that happens, information drives consumer behavior.
In recent years, companies like Uber have disrupted market leaders by (1) creating a marketplace for supply and demand to come together, (2) providing consumers visibility into pricing and options like quality, functionality, etc., and (3) bringing the sale to the consumer’s fingertips.
Netflix, Amazon, hotels.com, and countless others did the exact same thing.
Imagine a world where we as the consumer have visibility into how every seller in the marketplace runs its business from a sustainability perspective. Companies A through N produce roughly the same widgets, and through optimization and competition, the price of those widgets is the same, +/- an insignificant amount.
As consumers, imagine that we have the ability to see how much precious resource each of these companies consume and how much waste each produces. Imagine we have further visibility into how they treat their employees, how they treat their customers, and how they interact with society and government and regulation. If you had that information, would it impact your buying decisions? Would it impact where workers choose to work?
As we dig into some of the issues that are top of mind in the ESG space, let’s focus on what’s happening in the market for carbon credits (one type of ESG asset).
By way of example, an oil and gas company that generates a significant carbon footprint may choose to purchase carbon credits to offset or correct for the adverse impact they are having on the environment. Today, purchasing carbon credits is inconvenient and costly. The absence of an open, transparent market has led to limited availability of such credits, credit offerings that lack measures for traceability and quality, and significant variability in pricing.
What’s Next for ESG?
The current state of ESG is ripe for disruption.
Once an open and transparent market exists for carbon credits and other ESG assets, and that market also provides (we believe this is key) information that allows us to measure the net impact of a company’s ESG activities, ESG activity will drive consumer preference (and demand for carbon credits and other ESG assets will soar).
In collaboration with the HBAR Foundation and BlockScience, we are setting out to build an ESG marketplace that addresses the above: to empower consumers to have more options, with greater trust and transparency at our fingertips.