ESG

by Steve Klein, Renewable Energy Group (REG)

Three letters that could spell a wake-up call for energy businesses

Environmental, Social & Governance, or ESG, is a phrase that entered corporate parlance in recent years in response to growing interest among investors regarding companies’ non-financial or intangible assets, namely environmental, social and governance data. Climate change, social justice and the way businesses operate are of growing importance to the public. While publicly traded companies may be among the first to release ESG reports, this change in the public consciousness affects businesses of all sizes, from multinational corporations to local heating fuel delivery providers.

Unfortunately, even some industry leaders are still unfamiliar with the term, ESG. As fuel dealers adopt lower-carbon products and transition their business models away from fossil energy, ESG concepts are of growing importance. Many of today’s customers don’t just care about how fast your company can repair their boiler or the cost of your heating fuel — they also care about who you are and what you stand for, and these considerations factor into the decisions they make as consumers every day.

This doesn’t mean that tiny mom-and-pop HVAC repair shops should begin releasing annual ESG reports, but it does provide some valuable food for thought when it comes to marketing (especially green marketing) and customer communications. With this in mind, let’s take a closer look at the concept of ESG, using examples from REG’s recently released 2020 Environmental, Social and Governance report.

Environmental Sustainability

Broadly speaking, this refers to the things a company does to help protect the planet, which can be as small as phasing out paper billing statements in favor of electronic receipts or as a big as reducing carbon dioxide emissions by selling higher blends of Bioheat® fuel. For example, in 2020, REG produced 519 million gallons of biofuel, which generated approximately 4.2 million metric tons of carbon reduction. Using tools like the National Biodiesel Board’s Emissions Calculator and the EPA’s Greenhouse Gas Equivalencies Calculator, companies that sell Bioheat fuel can share statistics like this with their customers as well.

Social Responsibility

This describes the way a company engages with local communities and charitable causes. These actions generally reflect a business’s “company culture” and shared values. For example, in 2020, REG donated to over 170 causes focused on our philanthropic areas of emphasis, including youth, health and the environment. Additionally, our employees volunteered over 2,000 hours of their time in their communities. Likewise, many heating fuel providers are also recognized as valuable community partners. Companies that participate in the Low-Income Home Energy Assistance Program or contribute to industry causes like Oil Heat Cares often promote these activities in company newsletters and other customer communications.

Forward-Looking Governance

This is all about the way a business is run and includes things like corporate structuring and growth strategy. In 2020, REG reorganized its Senior Leadership Team, with the creation of new Senior Vice President roles to help accelerate the company’s growth. Examples for heating fuel delivery companies might include expanding into a new service area through mergers and acquisitions, or adding a new position related to blended fuel sales and purchases.

For more information and examples, download REG’s 2020 Environmental, Social and Governance Report.

Steve Klein is Senior Manager, Marketing for Renewable Energy Group. He can be reached at steve.klein@regi.com or 515-239-8364.

Bioheat® is a registered trademark of the National Biodiesel Board, used with permission.

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