Transitioning to clean energy and carbon neutrality is no longer “just” an ESG talking point. These days, it’s undeniably good business.-By Robin Byrd

The challenges, costs, and inconveniences that the world heaps on businesses that aren’t quickly transitioning to clean energy and carbon neutrality are increasing by the day. It isn’t simply scorn on social media or shaming in the court of public opinion. Instead, hard dollar costs, market share erosion, and issues with talent recruitment and retention mean that the environmental, social, and governance (ESG) principles companies espouse in annual reports and press releases need to be translated into real world changes at a faster rate.

These real world changes will only be possible with the help of renewables and sustainable practices. Here, some of the key areas of impact will be discussed, with an eye toward solutions that quickly move the bar while also yielding meaningful bottom-line improvements.

How Clean Energy Cuts Costs and Reduces Business Risk

For years, companies have made transitioning to clean energy sources a part of the ESG conversation. Today, rising energy costs and grid stability issues are putting fresh wind into the conversation. As a result, boards and operations leaders are now pushing for a faster transition to more localized and cleaner energy sources.

The impact of switching can be rapidly seen in the bottom line. For example, according to Cherry Bekaert, an accounting consultancy, manufacturers who set up on-site solar grids with battery storage can reasonably expect to recoup the cost of the investment within two to three years. Depending on the geography, tax incentives and renewable energy incentives from utilities partners may speed that full ROI timeline even more. Even better? The lifespan of a solar array is estimated to be 20 years. That’s 20 years of protection against rising electricity costs, surge pricing, and the very real possibility of costly grid failures. In fact, the North American Electric Reliability Corporation has warned that more than 300 million people across the United States and Canada are at risk of power shortages during 2024 – but businesses with their own localized source of power won’t face that risk or the costs associated with unexpected price surges or unwanted electric downtime.

These kinds of harsh realities definitely shift the conversation around ESG. Suddenly, moving to renewable, clean energy sources isn’t an abstract “good for the climate” conversation. It is a front-and-center operational discussion about protecting the business from unwanted disruption, cost surges, and rising prices.

How Sustainables and Renewables Help Claw Back Market Share

Along with shielding the business from rising energy costs and potential power disruptions, clean energy and sustainable practices can also help companies gain ground on their competitors, clawing back market share that may have been lost due to other factors. This aligns ESG strategies other key business priorities, like lead acquisition, capital acquisition, and compliance.

When it comes to lead generation for sales and projects, moving the business toward renewables and best practices for sustainability gives multiple market advantages. First, some 72% of retail consumers prefer to buy from firms that share their values, and 78% of consumers value sustainability. Next, ESG talking points backed with real business changes provide opportunities to generate positive press coverage and favorable media reports, enhancing market position. Last but not least, many purchase groups are actively searching for suppliers and other partners who can meet specific sustainability standards or qualify to submit a proposal. Thus, a strong ESG profile puts a firm in a strong position to capture new business or even poach projects from competitors.

It also puts firms in a strong position to capture capital. Though some parts of the investing world are walking back explicitly prioritizing ESG in capital allocations, in other regions it is impossible to secure funding without clear ESG scorecards, reporting, and actions. Thus, in competitive markets, being able to come to the table ahead of peers and competitors on the sustainability and renewables front could mean the difference between securing capital for expansion and development or being turned down.

Finally, making a strong move to embrace renewables and sustainability best practices can give firms an advantage when it comes to compliance issues. Many firms, especially in regions with aggressive climate targets like the EU, are scrambling to keep up with the latest requirements. This can be viewed as a burden, or as a chance to create a competitive advantage by getting ahead on the compliance front. Moving ahead in this way also reduces the likelihood of penalties for failing to meet targets and creates a reputation for the firm as an industry leader.

How Ecofriendly Work Design Boosts Retention and Productivity

Having a reputation as a leader on ESG issues can also help boost retention and recruitment. Workers – and especially younger generations – want to work for firms that share their values. Additionally, many of the elements of ecofriendly workforce design turn ESG talking points into real differences in productivity and carbon neutrality.

For example, hybrid work arrangements feed into the work-from-home trend sweeping the world. They thus help with recruitment and retention, but by reducing the commuting hours associated with work, companies can also lower the overall carbon impact of the organization. In some case, less commuting also allows for a reduction in office space, parking allocations, and the associated maintenance costs, further lowering the total impact while still getting work done.

Another option is to redesign workspaces to take more advantage of natural light. This lessens the requirement for power, lowering carbon impact, and also has generous knock-on effects on worker productivity. Workers who spend their days with access to a view and natural light perform to a higher standard, sleep an average of 46 additional minutes per night, and take fewer days off for mental health reasons, according to studies from Northwestern University.

Concluding thoughts

As organizations seek an edge in today’s markets, ESG can be the answer. By leaning into renewable energy sources and sustainable workplace designs, firms have the option to lower their hard dollar energy costs over time, claw back market share, and gain productivity from their teams even as they reduce their carbon footprint and climate impact. It’s the exact connection many are seeking between doing what’s good for the planet and doing what’s best for the bottom line, too.