What is ESG, and Why do Idaho Companies Care?
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ESG, environmental, social, governance, has become a popular term for business reporting in recent years. Although this term first emerged in 2005, it wasn’t until 2017 when it became more well known. ESG investing has had mixed responses. According to an article from the NASDAQ, “ESG investing has become a fiercely debated trend within the financial sector. While some view ESG factors as crucial considerations, others argue these criteria are politically motivated and detract from returns.”
ESG policies are typically highly requested and often misunderstood.
Idaho Business for the Outdoors set out to clear the muddied water by hosting a panel discussion about how Idaho businesses view ESG in their operations. Panelists included Amber Bieg from Warm Spring Consulting, Brandy Wilson from J.R. Simplot Company, Brian Buckham from Idaho Power, and Mckinsey Lyon from Perpetua Resources. The panel was moderated by Kaycee Royer from Perkins Coie.
Warm Spring Consulting helps companies develop ESG strategies, assists with their ESG reporting, and helps them leverage sustainability for profitable advantages. Amber Bieg defined ESG as meeting society’s current needs while not compromising the needs of the future. She said that many companies are now reporting on ESG because investors are starting to look at a company’s risk profile. This includes environmental risk, employee treatment and retention rates, and many other factors that fall under the ESG bucket. Bieg stated that auditability of company reporting is crucial, while implementation and internal drive are the next most important pieces to the success of a company’s ESG program.
Brandy Wilson, from the J.R. Simplot Company, said their company looks at ESG through the lens of people, planet, and prosperity, learn more. Through the people's perspective they evaluate the health and safety of employees, partners, and communities. When it comes to the planet, their company is concerned with protecting the environment to support the harvest of their products. Lastly, they analyze prosperity through their business practices and the economic value they provide to rural communities. J.R. Simplot Company has seen the impacts of weather changes with longer growing seasons and shorter winters. The shift in climate patterns has made them adapt their storage systems and even consider growing new varieties of potatoes. J.R. Simplot Company has a sustainability leadership board with representation from every department. This team helps set the company’s ESG standards and evaluate risk throughout the value chain. Brandi said that all of this work really boils down to trying to help people be successful.
Brian Buckham, from Idaho Power says, “ESG is not a new thing” as a power company they have always had to pay attention to this. Idaho Power has a history of using clean energy and is now working their way back to clean energy by 2045. Their energy currently uses 31% hydroelectric power, and they would like to get that closer to 50%. Idaho Power is affected by changing weather patterns in a variety of ways: floods and droughts disrupt their hydroelectric systems, wildfires impact their facilities, and their services have to be storm resilient. One of Idaho Power’s biggest challenges when it comes to using 100% clean energy is maintaining affordability. After a customer survey they saw that most people want clean energy, but they do not want to pay more for it. Idaho Power continues to work toward cost effective renewable energy options, learn more.
Mckinsey Lyon, the VP of External Affair for Perpetua Resources spoke about how their company is trying to be better stewards in the mining industry. As a responsible mining company, they use ESG as a tool to evaluate risk. As a publicly traded company, their good ESG practices can encourage business investments. Perpetua Resources has reopened an old mine and is working to bring mining back on US soil. Lyon says that mining is an uncomfortable reality for most, but by implementing ESG standards throughout their operations they hope to gain trust and support from community members. Their company is also working to remove waste, left from previous mining operations, away from a nearby river. Perpetua uses ESG reporting like SASB and published a sustainability roadmap in 2021. Lyon emphasizes that ESG is a huge investment, but they are committed to collecting data to drive performance.
ESG can be a difficult topic to comprehend and can turn political quickly. When asked how the group is working to educate the public about why their business chooses to follow ESG standards the answer was simple. They would like to continue to educate the public through seminars and workshops. Royer adds, “Many companies implement ESG policies not because of governmental pressures, but because their investors, customers, and community stakeholders are demanding it. As discussed during today’s panel, strong ESG and sustainability programs have shown to be profitable for businesses while protecting things that are important to a variety of stakeholders. Finally, these types of programs have been around for a long time, they just have a new (and sometimes scary) name.”