The way the world looks at businesses is rapidly changing. Rather than operating solely in the best interest of their shareholders, companies across the globe are being pushed to also consider in their decisions what is best for stakeholders — their employees, their customers, and the community in which they operate.
From a consumer perspective, research conducted by the global public opinion and data company YouGov found that 87% of Australians think businesses have a responsibility to do social good, and the majority believe businesses have a responsibility to ensure their supply chain does not harm the environment and is free from damaging practices, such as forced labour.
Business leaders are increasingly becoming aware of the public’s opinion, with a survey performed by Accenture and the World Economic Forum finding that 72% of the CEOs said citizen trust will be critical to their competitiveness in the next five years.
In the investment world, it is becoming clear that purpose and profit are inextricably intertwined, and many are looking past the financials of the business, taking into consideration other factors The acronym “ESG” has become shorthand for investment methodologies that embrace environmental, social, and governance factors as a means of helping to identify companies with superior business models.
By examining these factors, investors can gain additional insight into the quality of a company’s management and culture among other characteristics, allowing them to better identify potential risks and rewards.
Investing in a company that is transparent in their focus on these factors not only indicates that they are well-managed, forward thinking, and better at anticipating and mitigating risk, but perhaps most importantly indicates that they are focused on long-term development.
Between 2016 and 2018, the value of sustainable and responsible investment assets in Europe, the US, Japan, Canada and Australia/New Zealand rose by 34 per cent to $30.7 trillion.
However, there does appear to be a disconnect among many global executives, who seem to understand the importance of sustainability and transparency in their business model but lack the ability to commit to and prioritize it.
A study conducted by Boston Consulting Group and MIT found that while 90% of executives find sustainability to be important, only 60% of companies incorporate sustainability into their strategy, and a scant 25% have it in their business model.
Companies must be able to not only bridge the gap between knowing sustainability is an important aspect and taking action in implementing it, but also communicate such efforts effectively and transparently. Cleanaway, Australia’s leading integrated waste management company, recently made a huge step in this regard, releasing their first stand-alone sustainability report.
The 88-page document, spearheaded by CEO Vik Bansal, aligns the company to the United Nations Sustainable Development Goals (SDGs) and the Sustainability Accounting Standards Board (SASB) Waste Management Standard, and they have also begun reporting their climate change risk disclosures in accordance with the Task force on Climate-related Financial Disclosures
Cleanaway is Australia’s largest waste management company, employing over 6,000 people today.
With over 4,000 specialist vehicles for waste, recycling, and liquid collection on the road, the company has a network of over 250 facilities including 48 recycling facilities, 83 transfer stations, 14 engineered landfills, two composting centres, and two incinerators, in addition to other facilities such as liquid treatment plants and refineries.
In 2017, in order to ensure the company was prepared to meet with Australia’s growing and evolving waste management needs Bansal unveiled Footprint 2025, a strategy for upgrading and improving their infrastructure with a focus on waste recovery.
The company has since acquired companies such as the hazardous waste collection, treatment and disposal company Tox Free Solutions Limited and most recently assets from SKM Recycling Group, bolstering their resource recovery capabilities and ensuring that they are able to address the increased need in light of the Australian government’s ban on waste exports.
The sustainability report is the result of a thorough process of internal discussions and engagement with shareholders, including the super fund UniSuper. Cleanaway is a part of their pre-mixed investments with sustainable focuses, and in its Global Environmental Opportunities single asset class for those who wish to build their own portfolio.
According to the company, they prioritised engagement on disclosure to better understand how Cleanaway manages its approach to ESG issues, providing guidance while emphasising the importance of reporting sustainability issues. In particular, they noted that the company’s recent expansive growth makes focusing on a strong culture all the more vital to long-term development strategies.
By collaborating with their shareholders, Bansal said that he and the Cleanaway executive team were able to create a report that “will provide us with a strong foundation to build on in future sustainability reporting.”
It comprehensively summarises all the actions that Cleanaway has already taken toward sustainability on multiple fronts, as well as their goals and directives for the future, taking the policies and goals that Cleanaway had in place and putting them in the framework of both the United Nations’ SDGs and their own PEMAF operating model, which stands for people, earth, markets, assets, and financials.
Below are just some of the ways derived from the report that Vik Bansal and Cleanaway are showing their dedication to the company’s mission statement of “making a sustainable future possible.”
One of the core values of Cleanaway is ‘Home Safe,” indicating their commitment to prioritising the physical health and mental well-being of all Cleanaway employees, whether they work within the facilities or in the corporate offices. While their goal is always a recordable incident frequency rate of zero, through the implementation of extensive training and procedures across the business they were able to reduce their total recordable incident
frequency rate (TRIFR) by 21% year-over-year, down to 4.5 from 5.7 in FY19. With a goal of a further 15% reduction by the end of FY21, the report indicated key steps that will be taken in order to achieve this, including plans to refresh and update their non-negotiable internal compliance requirements, minimum training hours, and competency requirements tied to their most critical risks.
They will also review their fire prevention and protection practices, mitigation strategies, and update their response procedures, while also placing a continued focus on mental health programs and preventative measures for the spread of Covid-19.
In response to two motor vehicle accidents, Bansal said that they would be improving the technology in their vehicles including introducing better systems to minimise distractions for their drivers.
In the previous diversity and inclusion engagement plan covering the years 2017 – 2020, Cleanaway reports having made considerable achievements. In order to better track the impact of their actions implemented to close the gender gap, they began reporting on remuneration and gender pay parity as part of their annual review of total fixed remuneration.
They also updated their parental leave policy and guidelines to align it with the pay cycle as well as increasing the make-up pay from 14 weeks to 18 weeks.
Active transparency in a business means not only reporting on the achievements, but also acknowledging where there is room for improvement, and while there was an increase in females in operational and operational management roles in FY20, they saw a decrease in females in management roles and female representation overall, and as a result they have set target increases in female representations for both categories for FY21.
Cleanaway seeks to continually find new ways to see waste as a resource, and each year is able to boast more sustainable measures taken to achieve this.
They were able to recover over 435,000 tonnes of paper and cardboard, 19,000 tonnes of plastic, and 25,000 tonnes of steel and aluminum, and generated 134 gigawatt hours in renewable energy, enough to power around 24,000 average homes.
Aiding in lessening Australia’s reliance on virgin refined oil and other fossil fuels, their lubricating and engine oil collection and recycling services were able to see 114 megalitre in used oil, and captured around 106 cubic megametres of the gas generated from the natural breakdown of waste in their landfills.
Unlike companies in other industries, Cleanaway is working to reduce greenhouse gas emissions twofold: both within their own company and through reducing emissions that would have otherwise occurred in their communities.
2019 also saw Bansal announcing the development of a plastic pelletising plant in Albury. Partnering with the recycled packaging experts Pact Group and the beverages company Asahi to ensure demand of output, Basal said “[The] facility will create a genuine closed loop recycling solution for the plastics we currently recover through our collections network.”
These are just a few of the ways in which the Cleanaway report provides total transparency as to how they are not only adhering to ESG standards for investors, but working every day toward their purpose of a sustainable future.
In taking this actionable step of comprehensively reporting the numerous ways in which they are implementing sustainability into their business model, Bansal has been able to show that his company is driven not solely by the profits it can make, but the value it is able to bring to its employees, customers, and community members.