An environment and social (ESG) strategy is vital for SMEs - Phil Ager | E4

An environment and social (ESG) strategy is vital for SMEs - Phil Ager | E4 transcript

Claire Scaramanga

Hello, here today joining us on the Scaramanga podcast, we have Phil Ager, who's the Managing Director of Control Energy Costs, who's going to talk to us about renewable energy and the part it plays in a company's ESG strategy. I think we can say with some certainty that the energy market is going through interesting times at the moment. Hello, Phil, welcome.

Phil Ager

Good morning, Claire. Good morning to you. The comment about the energy markets being an interesting time I have to pick up on that, certainly is the case.

Claire Scaramanga

Yes. So I mean, we know that obviously, Control Energy Costs has a strong focus on promoting renewable energy and net zero, where does that focus come from?

Phil Ager

Where does it come from? I guess it comes from the fact that our business, Control Energy Costs, provide energy management and procurement services to businesses of all sorts of shapes and sizes.

Phil Ager

But as was once put to me, energy is often the kind of entry point into the world of net zero and as much as it's your energy usage and how much you're paying for energy that often is the point that people start to consider a net zero approach or a sustainable approach towards starting their journey on net zero. So I think that's probably where the focus comes from. We're kind of in a, I'm not going to go as far as says privileged position but we're in the position of being able to talk to people every time they deal with an energy supply contract, renewal when they come to us for advice about how to manage their energy costs, in that we can introduce a sustainable converse energy conversation.

Claire Scaramanga

When a company's looking at their ESG strategy, so environmental, social and corporate governance, how do you think committing to sustainability and net zero help a business with their performance?

Phil Ager

It's a really good question. That's a really, really good question and one that we get asked quite often or I get asked quite often, and I think really, what one needs to consider is how the changing generations and consumers shall we say, younger generation, in particular, are so much more aware of the impact that businesses are having on the planet, and they're becoming much more discerning, and they're making informed decisions about where they want to spend their money, who they want to spend their money with and indeed, if you are a business looking for investment, or even looking for support from a bank, I think investors and finance houses are becoming far more aware that if a business doesn't have an ESG strategy, there's the possibility that their business model might ultimately become well to take it to a dramatic sense obsolete. So it is extremely important that businesses have a strategy to make sure that they are in keeping with how the world seems to be thinking now.

Claire Scaramanga

I think the majority of corporates are definitely on the page with that, but what about SMEs? Where do you think they are? Should they be focusing more on ESG and renewables?

Phil Ager

Yeah, as for why corporates are so much more focused on it, I guess that may come from the fact that for some time now, larger corporates have been required to report their emissions and their environmental strategy, their ESG policy, as we're talking about ESG, within their accounts they're mandated to report their strategy.

Phil Ager

So being slightly cynical, perhaps in the corporate world, there's been more of a requirement for them to do it. But I think with the focus now turning far more on the kind of people and planet side of things, in other words, businesses should now be not only focusing on their investments from how much money this does make for me, but their investments on how does this impact on my people and the planet, I think that SMEs really need to be following suit, just to keep up with the changing world and I don't think it's going to be that long before the level of or the size of businesses if you like that are required or mandated to report on their environmental credentials, that threshold starts to get lower. So I suppose I'm saying that more and more larger SMEs and it will come down the scale to smaller SMEs will also have to report their findings. In short, sorry, their environmental credentials, with their financial credentials each year, which in turn will allow consumers and investors also to make more of an informed decision about where they want to spend their money or who they want to invest with. Ultimately, I think it's a very good thing, but definitely changing times.

Claire Scaramanga

Absolutely. What can businesses in the energy sector like Control Energy Costs do to get that green message, that renewable message out to SMEs more?

Phil Ager

I think it is simply have the conversation, keep having the conversations, again, I'm reluctant to use the word privilege position, but we are in the position of being able to have that conversation with many businesses and it's all about planting the seeds and helping people again, make an informed decision as to why it might be beneficial to consider if we were talking about just signing an energy supply contract, one that is from renewable sources, or green energy contracts, as most people would call it. So I think that's what we can do to help get the message across.

Claire Scaramanga

And do you think more SMEs are taking up renewable energy?

Phil Ager

I do, I think probably for two real reasons. One is the difference in costs really, brown energy is the term but let's just call it non-green and green, the differential isn't as huge as many, many people think, sadly, the kind of energy crisis, as it were, has made people focusing on costs more than ever, well not sadly, that's a simple fact of running a business. But, I think all we can do is just keep talking about it, basically, just keep talking.

Claire Scaramanga

So as a business, you yourselves, you've made a commitment towards net zero, and what are the steps that are in place that a business needs to go through to achieve that? Is it hard? Is it easy? Or somewhere in the middle?

Phil Ager

I guess the simple answer is somewhere in the middle, it's not easy but why would it be easy really, you can certainly do a lot to make it easier for yourself and I think, again, in my experience of these things, or the experience from our own business, but also working with others is the biggest challenge is often gathering the information. So to start a journey to net zero, which is what we did some time ago, the first step is really to calculate what your carbon footprint is and to be able to calculate your carbon footprint, you need to know a fair bit of data about your expenditure in various areas of the business, which you would generally find from within your accounts, you need to know what your energy usage is. It's that old adage, really, if you can't measure it, you can't control it. So it's not easy. But if you're working with a partner, and I'm not suggesting for one minute, that partner should be asked, but if you're working with a partner who can help you understand and work with you to calculate your carbon footprint, then it's absolutely doable for any business.

Phil Ager

In my own experience, we are often asked requests to provide proposals to provide services for very various businesses and more now than ever, one of the questions within those RFQ is "tell us what your carbon footprint is, and tell us what your sustainability policy is, or tell us what your ESG credentials are" and you almost rule yourself out of winning business by not having addressed that issue. So for what it's worth, my advice would be that no matter how difficult, you may see it as being, it pays dividends, ultimately, or you will lose out if you haven't addressed it. So that's my view.

Phil Ager

But yeah, I mean, to literally answer your question, steps to achieving it, the first step is to calculate what your carbon footprint is and then to get to a stage of net zero, you need to work with partners within your supply chain to then get them to go through the same process as you so they also understand their carbon footprint because ultimately, you can't be net zero until everybody within your supply chain follows that same route and that's probably the biggest challenge out there for all businesses. Offsetting your carbon footprint is really only a short-term solution

Claire Scaramanga

A fix while you're sorting out everything else.

Phil Ager

Yeah, quite quite.

Claire Scaramanga

What barriers have you come across, you mentioned working with your supply chain. Are there any other barriers and do you have any advice for businesses on how to get through those sort of potential blockages when moving towards Net Zero?

Phil Ager

Yeah, I think without a doubt the biggest barrier is your supply chain and how seriously your supply chain, take you for the provisioning of information about their ESG credentials and I think lies the issue for smaller business over bigger businesses. The likes of very big corporate organisations, you could say, wield so much power in as much as if a big supermarket chain were to go to one of their suppliers and ask them for details about their environmental credentials and things like that, then in all probability, that supplier is going to respond to the request from that big supermarket chain. But the further you go down the food chain, no pun intended, the less likely suppliers are going to be requested maybe respond to requests of that nature.

Phil Ager

For smaller SMEs, and we, control energy costs certainly fall into that business. If we go to some of our suppliers and say, we need to know more about your environmental credentials, what your carbon footprint is and are you prepared to join us on our journey to net zero? If you look at it, in its most simplistic sense, we find that most of them don't even bother responding and the reason they don't bother responding is probably twofold. One is they don't actually have answers to those questions, because they haven't done anything about it themselves or possibly, they're thinking, "I'll just stick there, I'll just ignore it. They're not going to do anything if I don't reply." and I think that we and businesses generally are going to have to start making some tough calls.

Phil Ager

We've already said that as we move into 2023, we are going to start making decisions about who we work with within our supply chain to maybe move to different service providers where possible, really, so that we can achieve our own goal of getting to net zero because I think from our perspective, as a business, not having demonstrated that we are doing everything possible to get there will ultimately hinder our ability to win new pieces of business and I think that principle applies generally to a number of businesses that perhaps it just hasn't dawned on them yet. I'll close that point by touching on the energy crisis, because businesses are faced with such a huge increase in energy costs, with all this going on in the world, that extra let's say a few 1000 I mean, doesn't necessarily have to be a few 1000 but that extra resources that they need to find to maybe go down or start a net zero journey might just be something they think well, we'll leave till a little bit later. The reality is there's a lot you can do to understand your carbon footprint and reduce it without spending any money if you talk to the right people and approach it the right way.

Claire Scaramanga

Presumably cutting usage is a good way of managing your expenditure?

Phil Ager

Yeah, cutting usage, I mean, never more than now has the whole concept of looking at how you use it and asking yourself whether you can reduce that usage has been on our mind so maybe this is a great thing that's coming out of the energy crisis as it were because people are suddenly waking up to the idea that you can actually save money by reducing wasted usage, whereas, in the past, it was just, "oh I might reduce my, my co2 emissions slightly by doing it" It's funny how money often is the sort of driving factor behind people's decisions, but you know, in the world of business, I get it.

Claire Scaramanga

Yeah. Might be the silver lining.

Phil Ager

I suspect we won't know that for a while but maybe yeah, maybe.

Claire Scaramanga

I mean, on that note, you know, with you know, the government has previously made a commitment to being net zero by 2050 and number of climate change targets and we've got COP27 coming up next month. What can we do? Do you think will we achieve it? Do you think we can achieve that target?

Phil Ager

I'm certainly not going to sit here and say, No, we can't achieve it, we all have to remain positive, and focused on the fact that we can achieve it. And, you know, it's such a cliche, and I almost hate saying it, but we just all have to have to do our bit to help as you were, I kind of hang on that point that you sometimes hear, you certainly hear big organisation say it sometimes, small changes make a big difference. Well, yes, they do collectively but some bigger organisations have the power to make more than just a small change. So you know, there are lots of big organisations that will hang their hat or we're making small changes and add that up with what everybody else is doing. It is making a difference it is, but you could do an awful lot more. So. Yeah, I think talk about it in every possible opportunity.

Phil Ager

I think they should be a subject for discussion in every kind of meeting, not literally every meeting, but team level within a business at the board level, right the way through, have that conversation so it becomes something that you talk about all the time. Again, I know I've already answered this, but will we achieve it? Or will the UK achieve its target by 2050? Yes, we will. We have to be saying that, we have to be saying that.

Claire Scaramanga

Yes. no option other than not to. You mentioned reducing energy consumption. What are your sort of top tips for businesses and maybe also people in the home as to how they can reduce their consumption?

Phil Ager

Top Tips. Yeah, again, it sounds like a cliche sounds like the obvious, I think we're all very guilty of overlooking the obvious, quite often. But I'm not gonna say switch the lights off, because we all know that, but it goes a little bit further. Within our business now, we've made a point of making sure that when people go home at night, they don't just put their PCs to sleep, they turn them off, they turn off their monitors, all simple little things like that and again, I think, you know, if you as a business, go through the process of understanding your carbon footprint, the impact that your business has, you will be amazed what little things you can do within your organisation that can change stuff, you really will be surprised and then I'll also go on to things outside energy, really, things that you know, we probably all do without thinking every day, if we're in the office, maybe even when we're at home, we go out and we buy a sandwich or buy sandwiches in a plastic packet, we'll buy water that's in a plastic water bottle, we'll buy a cup of coffee that's in a cup that we think is disposable, but that quite often isn't. Just think about what you're doing, go where you go and buy a cup of coffee, buy yourself a disposable cup.

Phil Ager

I've quoted this story before but I know of a couple of coffee shops, shall we say in London now that literally won't sell you a cup of coffee unless you go in there with your own cup. That's quite a bold move. But actually, I've since read is paying dividends because it's raised their profile as an organisation and has actually bought them more business. Just look around you even when you go shopping at the supermarket. I know a lot of supermarkets have reduced packaging and have removed carrier bags but just think about what you're buying, consumers drive a lot of change, we just need to be aware of what we can do to make it happen.

Claire Scaramanga

Absolutely. Finally, you've been running with a team, a 30-day challenge with Treekly which plants trees as people walk, how has that been going on?

Phil Ager

Well, it finished very recently and we kind of did it for a bit of fun really, employee engagement is always a good thing within a business but in this case, employee engagement had kind of a people and planet which was a term I used earlier on benefits or people in planet benefit. It was great for well-being. We've got a few quotes that we've been using in the marketing since we did the Treekly campaign from people saying it became a little bit of healthy competition within the office, it got them out, it definitely made them more aware of how much they were walking, or in some cases weren't walking. It was great. It was a really good thing to do. We did it for a bit of fun but I think it's actually produced more of a positive benefit than we ever imagined and we will do something along those lines, again, coupled with the fact that the flip side to it of course, whether the trees that were planted and the work it creates in planting those trees again, a very positive people and planet

Claire Scaramanga

Yeah, it's great when you can do things like that, where there's no downside. It's all upside.

Phil Ager

Yeah, that's exactly it. There was no downside at all, as far as I can see.

Claire Scaramanga

Well, that's great, thank you very much for your time, Phil very much appreciated for all of that information, and we just echo our encouragement for everyone to focus on ESG and to start protecting the planet and looking after their people as much as they can. Thank you very much.

Phil Ager

A pleasure. Thank you.

Claire Scaramanga

Thank you.