In order to meet the new demands of their clients, investors, and employees, companies today need to integrate various measures that affect environmental, social, and governance (ESG) factors into their day-to-day activities. It's a proven, sustainable approach with many benefits. Here's an overview of the topic from Sophie Robillard, vice president of private equity and impact investing and chief sustainability officer.
WHAT ARE ESG FACTORS?
Environmental factors
These factors measure the impact of a company's activities on the environment, climate, and biodiversity. Potential customers will look favourably on one company over another if it has committed to reducing its greenhouse gas emissions or has initiatives in place to minimize its negative impact on the environment (such as by reducing air emissions, improving energy efficiency, and practising sound water and waste management).
Social factors
The social component includes factors such as staff working conditions, talent development, health and safety in the workplace, diversity and inclusion strategies, and community relations.
Governance factors
This component involves analyzing the governance structure a company has put in place to make important decisions about things like business ethics, cybersecurity strategy, and risk management.
LEVERAGING ESG TO ATTRACT AND RETAIN TALENT
How can adopting ESG-related measures help companies at a time when many industries are experiencing a labour shortage?
To help answer this question, the Fonds conducted a survey of Québec workers (French only). Several interesting statistics emerged.
People are increasingly willing to do their part in protecting the environment on a daily basis, and they also expect their current and future employers to take concrete action. The statistics also show that companies need to implement health, safety, and wellness initiatives and anti-discrimination measures to retain and attract a skilled workforce.
Workers are doing more and more research before applying for a job. They'll scrutinize an employer's website to learn more about the company's mission and values. If the mission and values align with their own, they'll be more tempted to apply.
"A company that strives to be economically, environmentally, and socially conscious will therefore be more attractive to potential talent and retain more of its staff."
Sophie Robillard
HOW ESG IMPACTS BUSINESS PERFORMANCE
A company that has good environmental policies and practices, cares about the well-being of its employees, and optimizes its governance can reap many benefits. It can position itself favourably in relation to its competition, gain market share by responding more easily to prospect requests, and improve the perception of its employer brand.
"ESG, or sustainable development, is not a separate issue. It's not something that exists apart from your regular operations. It has to be part of your business strategy."
Sophie Robillard
HOW DOES ESG WORK AT THE FONDS?
At the Fonds de solidarité FTQ, we have positioned ESG as both a tool to manage risk and an opportunity to create value.
ESG due diligence is now systematically integrated for every new investment. The Fonds also offers support to companies that wish to improve their practices. That's the role of Asthuce, the team of experts at the Fonds who assist partner companies by proposing clever and practical solutions to strategic and operational challenges.
"We offer this service to give companies a chance to pause while we help them better structure their project and transition to sustainable activities."
Sophie Robillard
Asthuce can help companies with the seven main areas of their operations.
A BUSINESS THAT LEADS BY EXAMPLE
One company that the Fonds has supported is CMP Advanced Mechanical Solutions a Fonds partner since October 2022. This family-owned company is the leading provider of manufacturing services in eastern North America, specializing in the design, production, and integration of enclosures for complex mechanical systems. CMP set a few key objectives to improve its environmental impact, including to reduce waste, improve air quality, and reduce water consumption. It also has plans to automate processes and expand its facilities by building a zero-carbon plant by 2024.
"The environmental component has always been an integral part of our approach."
Alain Prévost, vice president of continuous improvement and quality at CMP
With advanced environmental practices already in place, CMP needed the Fonds' support to improve its social component. Since it's crucial for companies to maintain close ties with their workforce, CMP's management team wanted to make sure employees understood the arrival of a new shareholder in the organization. To strengthen the company's social component, Asthuce helped CMP identify and understand concerns employees might have and develop an adapted communication strategy to announce the new partnership with the Fonds.
By responding to the expectations of its stakeholders through various sustainable strategies, CMP has been able to improve certain day-to-day operations that allow it to stand out from the competition and create value for the organization.
Watch our panel discussion to learn more about the environmental policies implemented by CMP.
