The recent raid by German police and financial regulators on the offices in Frankfurt of DWS – the majority-owned Deutsche Bank asset manager – has made everyone sit up and take notice of Environment, Social & Governance (ESG). Latest news stories of celebrities and football teams using up carbon for what many feel was unnecessary travel is further example that people are giving a greater green scrutiny to those in the public domain. With attention to climate impact becoming more mainstream, business should be worried about how its green credentials are viewed.
Social media has been buzzing with stories about celebrities’ carbon footprint recently. It kicked off when Kylie Jenner posted photos of herself and partner using private jets. On greater investigation it turns out, though, she didn’t even make the top 10 of A-listers whose use of private transport racked up carbon numbers that place a disproportionate burden on an environment that we all share.
Steven Spielberg, Oprah Winfrey, Kim Kardashian all beat Kylie in that respect. Floyd Mayweather is estimated to have used over 7,000 tonnes of carbon so far this year from use of his private jet. Compare that to the average person who is estimated to emit 7 tonnes per annum. But the prize for highest personal emitter goes to Taylor Swift. Since January this year, she has spent the equivalent of 16 days in the air during 170 flights. Her emissions are 1,184 times that of her average fan and its only August.
No doubt Ms Swift is a busy lady with a demanding schedule and many people to see but, with the planet clearly struggling with climate impacts from heat to floods, that’s an awful lot of carbon she is asking it to absorb so she can get about.
Maybe it is just as well she doesn’t play football. With the season not even started, Aston Villa have managed to travel 22,500 miles to play friendlies. They’re one of several big European football clubs who hope to exploit the lucrative Asian market. But that’s almost 90 tonnes of carbon emitted before they’ve kicked a competitive ball this season.
Football clubs or American celebrities – they’re all coming under increasing criticism for carbon emissions. Boeing estimated that 80% of the world’s population had never flown. Another estimate suggested that only 6% of the world’s population would fly in any given year. In the UK, analysis shows that around 15% of flyers take 70% of the flights. Taylor, to be fair, is really just an (extreme) example of an unequal world. She and the other celebs are, however, being forced to become more aware of the negative feelings towards their lifestyle.
And some are trying to do something about that. Tottenham Hotspur (53 pre-season tonnes) now make a conscious effort to improve their impact by travelling to all domestic matches by coaches powered by biofuel. Manchester United (79 tonnes) reported that they had offset their admittedly high pre-season carbon emissions by investing in a reforestation project in Western Australia.
There’s a clear message here – and that is that the public are now willing to challenge those in the public eye on carbon and question lifestyles that appear unnecessarily extravagant.
To bring this back to the wider business community – there is a lesson here – your customers are watching you and will be increasingly willing to challenge. Reputations can be quickly lost and not all brands will attract the same loyalty or forgiveness as a favourite football team.
DWS got caught up in this when accusations of greenwashing in the marketing of the ESG capabilities of their investment products led to their offices being raided in June this year. The furore led to the subsequent parting company with their CEO within 24 hours of the raids.
Resilience First recently released its latest Guide for Non-Executive Directors Resilience First launches NEDs Guide to Operational Resilience which has a section on ESG. Resilience First members, the global risk consultancy, Control Risks, spoke about this at our recent webinar. Some of the main points that came out of that were:
- Despite greater environmental awareness nowadays, some businesses are still not getting the basics right with, for example, inefficiencies around energy, waste, or water management
- Being proactive about ESG helps to reduce the risk and aids resilience. Accusations of greenwashing are a risk, but businesses can protect themselves by being transparent, including being open about where problems lie
- Managing ESG data is important as is knowing who is responsible for the data, how it is being collated and reported. Governance structures need to ensure data is available for all parts of your organisation wherever its location and should consider supply chains. The root cause of failure is often due to a lack of governance. Putting in place a management structure to oversee the data process can take a while depending on the size of the organisation but it is worthwhile to make sure data is accurate and meaningful
- ESG is long term – don’t just consider the approach of the current Executive but think about how your organisation will administer over many years
Regulation of environmental performance is increasing, and mismanagement leaves a business open to legal action (witness DWS), business inefficiency, a failure to attract talent and reputational risks.
