Integrating ESG with Daniel Jacob | E093
Improving your environmental, sustainability, and governance practices.
On today's episode Jason Pereira talks ESG (Environmental, Social, Governance) with Daniel Jacob, founder of Changing Habits Solutions. Changing Habits is a market leading ESG Consultancy that helps businesses incorporate ESG and sustainability strategies into their business model.
Episode Highlights:
0.57: Daniel says that they help companies integrate Environmental Social and Governance metrics into daily corporate operations and develop strategies to improve their ESG performance over time.
1.28: ESG is a set of metrics or tools that companies can take to essentially focus their efforts and become more sustainable. Because we are operating in an environment and society that needs to remain in balance, says Daniel.
2.52: Daniel talks about the definition of all three ES&G and where the actual definition goes beyond just those three.
3.01: The "E" in ESG stands for Environmental and it takes into account how a company uses natural resources, like water for example, as well as the impacts of its operations on the environment and the communities it operates in.
4.44: The social aspect is social that really addresses the social impact and associated risk from societal action, employees, customers, and the communities where it operates, says Daniel.
5.28: The governance aspect is really assessing the timing and quality of decision making. This is in service of positive societal impact and risk mitigation.
8.22: If you are a manufacturing company, you will probably start with the environmental aspect because obviously you have impact from a waste perspective, from a greenhouse gas perspective and that's likely to be higher, says Daniel.
10.44: Diversity, equity, and inclusion matrix are associated not only with the gender profile of the organization, but by category or by seniority within your organization, says Daniel.
12.30: There are various major stakeholders of the companies that are increasingly putting pressure on the company to take action on the ESG, and consumers are changing their consumption habits and behaviors.
13.07: Investors are increasingly looking to de-risk their portfolio and businesses developing more ESG practices typically means a better investment opportunity, says Daniel.
14.58: "For every risk there is an equal opportunity. If you take climate change as a risk perspective and start to assess, how can I reduce my emissions into carbon credit this is a potential revenue generating scheme"
16.01: Daniel has seen a lot of sustainability linked loans offered by some banks that says, if you hit sustainability targets, you will be able to reduce your interest rate or your cost of capital.
18.01: There is no time to get started with ESG consultants. The best time is today regardless of where you are on your business journey, says Daniel.
22.01: There are over 1000 different metrics or issues under ESG combined. You want to make sure that you focus on the top ten or twenty on which you can have a material impact, says Daniel. Daniel talks about how you establish and use ESG metrics and how they are different from any other business key performance indicators that they may utilize.
24.03: Invest to engage in a much more virtuous and positive diver of change, you basically invest and then you work with the individuals in place to adapt and transition the business model in a way that you make them understand the risk associated with continuing this business model, says Daniel.
25.31: Daniel talks about the length of a normal engagement. How long does it take to start implementing this and see real change within the business and be able to hit the metrics?
27.12: As per Daniel, once you go from implementing a reporting or data management software, then it becomes so much easier to start doing strategy to start extracting meaningful information.
3 Key Points:
There are over 1000 different metrics or issues under ESG combined. You want to make sure that you focus on the top ten or twenty on which you can have a material impact, says Daniel.
Daniel talks about how you establish and use ESG metrics and how they are different from any other business key performance indicators that they may utilize.
Daniel talks about the actual net reciprocal benefit of ESG. He shares what is the feedback cycle on this underlying business metrics that really matter to business owners which is profitability, costs and revenue?
Tweetable Quotes:
"We need to strike a balance between about profits, the environment and society and this is the goal of sustainability and to get there we use ESG metrics or tools." – Daniel
"Even if you don't believe in climate change at the end of the day, I think we can all agree that polluting the air and polluting the ground and polluting the water is probably not a good thing." – Jason
"If the regulators come in with new regulations that you haven't seen you are going to have to play catch up and can't take a while and probably put a lot of your business at risk." – Daniel.
"If you are going to do something about sustainability in your own company, your suppliers need to get to the same level as you." – Daniel.
"We have been operating in a way that doesn't consider the environment. Sustainability includes our economy's long term ability to survive" – Daniel.
"As investors, we should be empowered with as much information as possible to make decisions for someone who might invest in." - Jason
"Baseline is identifying what you have done because most companies have done stuff, they just haven't labeled it as sustainable or it's fragmented or across different functions or communication material." – Daniel
Resources Mentioned:
Facebook – Jason Pereira's
LinkedIn – Jason Pereira's
LinkedIn - Daniel Jacob
Website - https://www.changinghabits.solutions/
Book A Free ESG Consultation: https://calendly.com/danieljacob
Full Transcript Hosted on Acast. See acast.com/privacy for more information.
Full Transcript;
Producer: Welcome to the Financial Planning for Canadian Business Owners podcast. You will hear about industry insights with award-winning financial planner and entrepreneur, Jason Pereira. Through the interviews with different experts with their stories and advice, you will learn how you can navigate the challenges of being an entrepreneur, plan for success, and make the most of your business and life. And now your host, Jason Pereira.
Jason Pereira: Hello, and welcome. Today on the show I have Daniel Jacob, founder of Changing Habits. Changing Habits is a ESG consulting company that helps consult businesses on how to incorporate ESG and sustainability strategies into their business. And with that, here's my interview with Daniel. Daniel, thanks for giving the time today.
Daniel Jacob: Thank you, Jason, for having me over.
Jason Pereira: Daniel Jacob, tell us a little bit about what it is you do.
Daniel Jacob: We help companies integrate ESG. ESG stands for environmental, social, and governance metrics inside their day-to-day activities and operations and identify the strategies to improve their ESG performance over time.
Jason Pereira: Excellent. So, we're going to dive into that, stay away from some of the controversy. We'll address the controversy shortly. So first off, okay, let's discuss what is ESG? You just talked about the three words, but let's just go in and dive into what this entire framework or this entire trend is really trying to get to the heart of.
Daniel Jacob: So first of all, ESG is, for us, a set of metrics or tools that companies can take to essentially focus their efforts in becoming more sustainable. We can take a step back from here and saying, what is becoming sustainable? It's just that we are operating in an environment, so a physical environment, and society that needs to remain in balance. If we overshoot our footprint on the environment, we start to degrade our ability to survive over time. And if we impact society too much, we start creating negative backlash from the society that we actually interact with, work with, et cetera. So, we need to strike a balance between profits, the environment, and society. This is the goal of sustainability, and to get there, we use ESG metrics or tools to identify what and how companies can take action to reach sustainability. Does that make sense?
Jason Pereira: It does. And we got the three categories and they overlap and they don't in some ways. And at the end of the day, if you ask the average, or most business owners, "Hey, if you could do things in a way that wasn't polluting, that benefited everybody around you, all your stakeholders, and still be profitable, would you do it?" I'm sure in most cases, people would say yes, but they're maybe lost on how you even do that. And then you talked about this as metrics. So this is a measure and test and iterate process. So, we'll get to that in a second, but let's talk about the definition of all three of those, E, S, and G. And where the actual definition goes beyond just those three. So, let's start with E, the obvious one.
Daniel Jacob: So, E stands for environmental and it addresses the impact on the physical environment and the risk of a company and its suppliers and partners from climate and related environmental events. So, examples of environmental will be climate change, greenhouse gas, air pollution, water and waste management, waste and hazardous material, and biodiversity and ecosystem impact. So again, just taking a step back, there needs to be dual materiality here or dual impact, so it's the risk that these issues have on the company and the impact that the company has on its environment in society. It needs to be these dual elements being considered here. That's only the environmental side.
Jason Pereira: If you're a small sole proprietor, the environmental impact of what you do is probably not something that's top of mind, but as you grow in scale, you start basically selling to more and more people. These are things that are important to different customers. And I'm sure, even a company is as big as seven people... I've had questions about what is my gender diversity policy, which we'll get to stuff on that later. And it's like, okay. First time I got it, I'm like, "I've got one partner and four employees. Cut me some slack here. I'm a small shop." But this is becoming more and more important to anyone who deals with that, because it's important to the individual, they make their buying decisions necessarily could be impacted by it. So, that's the environmental side and we all know debate what's happening there or not, at the end of the day, I think most of us will agree even if you don't believe in climate change... I'm not going to get into that do, but we'll leave the people who don't out. Even if you don't believe in that, I think at the end of the day, I think we can all agree that polluting the air and polluting the ground and polluting the water is probably not a good thing for any of us. So let's talk about the second one, the S. The social. This one's a little bit more abstract for people to wrap their heads around. So, talk to me about what the social aspect is.
Daniel Jacob: So, social really addresses the social impact and associated risk from societal action, employees, customers, and the communities where it operates. So some examples of that is labor practices. Health and safety falls under social elements, community engagement, diversity and inclusion, community relation, product and service attributes, but it's also the diversity, equity, and inclusion within your organization making sure that everybody has the right sets of opportunities and that you actually become more aware of the landscape of your own staff.
Jason Pereira: Okay. Absolutely. So, makes perfect sense. This is the human environment you're dealing with essentially, right?
Daniel Jacob: Correct.
Jason Pereira: So, makes perfect sense. And so now let's talk about the G, the governance aspect.
Daniel Jacob: So it really assesses the timing and quality of decision making, the governance structure, the distribution of rights and responsibilities across the different stakeholder groups. And this is in service of positive societal impact and risk mitigation. So essentially, it's covering your business ethics, your data security and data privacy processes internally, your capital allocation. This means that what kind of R&D investments are you making? Are you making R&D investment in sustainable products and services? Do you even know how much percentage of these investments are made on these types of products? Do you even know what kind of revenues come from sustainable products and services in your portfolio? So these will be metrics that will be following under governance. What's the governance structure and engagement at all levels, including the board of director? What kind of rewards and incentive do you provide or do you have in place for your senior management? Are they incentivized based on ESG metrics and performance improvement or not? And what kind of policies, external disclosures, so how do you report on progress on ESG? What is your position and advocacy within your peer group and within your industry?
Jason Pereira: So, now let's talk about, basically, the formation of policy. Let's talk about your involvement here. I'm guessing you come in. What's the first thing you do? Do you assess their current status and all of these different things? Do you talk about what their ideal policy is? Where do you go?
Daniel Jacob: That's a great question, Jason. We initially start, not by telling them we have to look at everything of their environmental, social, and governance. You mentioned it earlier. Depending on what type of industry the company's in, they're going to have a set of different material metrics or material issues. By material, it means that they can have a significant impact. It's a risk on their future resilience or their capabilities to stay in business in the future. And also, they can seize opportunities along the way. Now there's over a thousand different metrics or issues under E, S, and G combined, so you want to make sure that you focus on the top 10, top 15, top 20, on which you can have a material impact, it can have a material impact on your organization.
So the first step is really to say, out of all these metrics, depending on which industry you are, depending on your environment or direct operating environment, and depending on which stakeholders are putting pressure or asking questions, you'll be setting a priority list of ESG metrics and topics that you'll start focusing on. So it's really just bringing it down to what is important for you to care about, and then you start iterating from there. So the first thing is set... I don't know, top five, top 10 issues. If you're, for example, service companies, you'll be more on the social and governance. How you care about your people, and on the governance, how your products and services impact the people, because your environmental impact is relatively low. But if you're a manufacturing companies, you'll probably start with the environmental aspect, because obviously you have impact from a waste perspective, from a greenhouse gas perspective that's likely to be higher. And on the social side, probably health and safety, because you have probably incidents or accidents likely to happen in your operations. So, the point is not to care about everything. The point is to care about the thing that actually matters and on which you can have an impact. And on the reverse, can have an impact on your business.
Jason Pereira: So this isn't about coming in with one utopian view of how things should be run, dictating to that. This is about, like you said, what is the thing that has material impact on your business today? So, that makes perfect sense. From a business standpoint, as a business owner, whether you believe in this stuff or not, this has to resonate. It's to say, okay, so whether I believe in this stuff or not, this does exist in the world and it is something I need to address if I wish to continue to be a successful business owner. So again, you're saying let's... Again, you can't reinvent the universe all at once. So bottom line is, let's focus on the things that matter the most right now, is what you're basically saying, and trying to pick a few of them. Again, any other consultant would come in and say, "What are the key things you need to improve right now?" You're just doing it from an ESG lens, so that makes a lot of sense. Okay. So you do that. And then of course you say, you talked about metrics. So the old saying of 'what gets measured gets done,' resonates everywhere and clearly resonates here. Talk to me about how you establish ESG metrics and how they're different from maybe other business KPIs, key performance indicators, that they may utilize.
Daniel Jacob: So it really depends on the set of topics that are prioritized. So for example, if you're talking about greenhouse gas, you'll be looking at, obviously, your greenhouse gas emissions, your footprint, what kind of intensity do you have. For example, emissions per millions of revenue or per dollar of income, per head count. It really depends on the intensity of your operation, and you'd be seeking to reduce this over time. There's different aspects that this would generate, is that you might orient your business decisions to use material or suppliers that are less greenhouse gas emitting. You can also, by reducing your emission, there's certain schemes where you can even transfer those reductions into carbon credits that you can potentially sell in the market. So, there are business opportunities that stem from starting to monitor, for example, your greenhouse gas emissions under E. Under S, obviously health and safety related elements. You want to reduce your incidents. You want to make sure that you put in place safety measures and protocols to reduce your impact. Your diversity, equity, and inclusion, the metrics that are associated could be a gender profile by... And not only the gender profile of the organization, but also by category or by seniority within your organization, because you say, "Hey, we've got 50% women, but they're all at the bottom end of the spectrum."
Jason Pereira: Entry level.
Daniel Jacob: It's not necessarily ideal. So at least, we're not pushing companies to set targets or to, I would say, set bias or positive bias when they're recruiting, for example. But just being aware of these numbers, initiate a reflection on, maybe we can improve. Maybe we can work on conscious bias when we're recruiting or when we're reviewing potential talent. So these are things that are the initiators or at least the initial steps from a social perspective. And finally, under governance, it's really to look at how often do we talk about these topics? Are these topics even on our radar? Are senior managers and Board of Directors aware of these types of risks? Are they educated on these types of elements? Do they even know how much financial impact can be... I say how our company can be impacted financially by these future risks that we do not currently have on our radar by lack of awareness? So, these are things that I would start quantifying and establishing, or at least establishing the baseline to understand where we stand on these elements today. And also having a look of the lay land, looking at our competitors, industry peers. What are they doing about it? And maybe I can bridge the gap, maybe to going beyond metrics, Jason, and maybe giving you some insights on why it matters right now to engage in the ESG metrics concept and at least understanding which one would be prioritized for your organization to report on. There's various major stakeholders of the companies that are increasingly putting pressure on the company to take action on ESG. Consumers are changing their consumption habits and behaviors. They are selecting companies, or products and services from companies, that demonstrate higher sustainability practices. Employees are choosing increasingly... And I mean how hard it is to hire these days. And a lot of small business owners know that. If you have a narrative or a purpose around sustainability, it does attract a number of, especially Gen Y and millennials that want to align their work with their purpose or at least values. Then on the financial side, investors are increasingly looking to de-risk their portfolio. And by showing that you have a good control of ESG risk, that means that you are a better investment opportunity. And therefore investors are likely to ask you for specific numbers that they can compare your organization against other potential investments that they would have in the same industry. Same thing for bankers when they lend to your company. If you are showing that you have a better hold on your ESG practices and ESG management, then you'll be a lower liability for the organization for the amount that they've lent to you. So, they have an incentive to reduce your interest rate accordingly.
And finally, the regulator is basically the last one in line, but probably the most important, as it's your license to operate. If the regulators come in with new regulations that you haven't seen, you're going to have to play catch up and it's going to take a while and probably put a lot of your business at risk. So, even if one or two or three of these stakeholders start to put pressure on your company, it's already too late. You might want to have that on your radar ahead of time.
Jason Pereira: Well, I say the same thing in my business. The best way to basically deal with regulatory reform or anything that comes down the pipe is to actually be ready for it well before it ever hits you.
Daniel Jacob: Right.
Jason Pereira: At the end of the day, adopting best practices make a lot of sense. And let's talk about... So we've talked about this from a protection standpoint, but talk about the positives of this, right? Talk about the actual net reciprocal benefit. Address some of this for investors looking to invest in you, employees looking to work for you, reputation wise. But the underlying business metrics that really matter to business owners, which is profitability and costs and revenue. What's the feedback cycle on this? How does that improve all those three?
Daniel Jacob: This is a really interesting point. Thank you for bringing it up. For every risk, there's an equal opportunity. Every risk that I've highlighted so far, introduces an opportunity. If you take climate change as a risk perspective and start to assess, how can I reduce my emissions, if you can translate those reductions into carbon credit, this is a potential revenue generating scheme. Now, for example, in circular economy, if you find a way, a logical way, to capture the end of life of your product, if it's a physical product, you can dismantle it and reuse it in your next production cycle, and technically you should be able to reduce your cost of material, therefore being more profitable. So, these are examples of very tangible means that you can generate profit and returns from having a more sustainable business model.
There's so many co-benefits to engaging in sustainability practices, products, and services is that, obviously, you attract a new breed of consumers that are, obviously, growing in numbers. You are likely going to have a lot of choice for employees, something that's a bit of a luxury, not right now. Again, you'll be able to attract better financing and with better conditions. For example, we've seen a lot of sustainability link loans offered by some banks that said, if you hit those sustainability targets, you'll be able to reduce your interest rate or your cost of capital. And this has a direct impact on your finances. And obviously being ahead of regulators is also a way that, if you're a part of association, you can also influence regulations to go forward and work in your favor. If your business practices are better for the environment or better for society, the regulator's going to take note of that and probably move the regulation in that way, so that does generate a direct competitive advantage right off the bat.
Jason Pereira: Absolute. Okay. So, at what stage... And frankly, this is probably stuff we should think about at all stages, but what stage of a business' life cycle do you typically get involved? What is a company size that is more typical for someone looking to hire an ESG consultant?
Daniel Jacob: It's really interesting is to say it really depends on the type of pressure that you are feeling. For example, we've been working mostly with larger organizations because these are the ones that are being asked to disclose ESG metrics and are being asked by their investment partners or bankers to disclose these numbers. It usually start at the top of the pile. The bigger ones get asked first to report on specific numbers and therefore they have this immediate need to quantify and to report on it. But we've also engaged with smaller companies that are more on the, "Hey, I feel there's an opportunity here that I might not be seeing. Is there a way that we can start initiating a business case for sustainability practices within my operations?" And therefore, it doesn't come from the need to report on specific ESG metric in a standardized way, but coming from a way that you can embed new strategies and ways of thinking in inside your business model. So it really depends on from which lens you come and from which pressure point this sustainability pressure comes from. And therefore, you start taking action on that. So there's really no ideal time.
The time to get started is today, regardless of where you are on your business journey. If you're at the startup level, at least ideation, just embedding some of these thought or at least concepts inside your business model is definitely not a nice to have at this point in time. But if you're an advanced stage and more mature stage, then you ought to start looking at how is my business at risk? How is my current operations at risk in the way that we are operating today? And how can we start initiating, at least, awareness building to start, seeing, oh, by next year we should be starting to engage in, for example, carbon accounting or at least understanding what our footprint is as a starting point. So I don't know if that answers your question, but obviously there is something in there for everybody. And it really depends from which pressure point. Is it a consumer pressure point? Is it an employee? Is it an investment or banker pressure point? Or a regulator, or even competitors?
As we're working with larger companies, one of the elements that we work on is supply chain. When we ask them, we say, "Well, if you are going to do something about sustainability in your own company, you're going to be asking your suppliers to get to the same level as you, right?" Because you want to de risk your supply chain also. So all these smaller companies that our clients of these larger organization are going to, sooner or later, and probably sooner than later, going to be asked to provide some of these metrics also, so that these bigger companies can report on their supply chain. So it's just a matter of time before the cascading down or trickle down effect impacts all the SMEs in our society or in our economy.
Jason Pereira: Well, you say asked, but they're being told also, right? This is becoming mandatory for different forms of governments
Daniel Jacob: I'm trying to be light here.
Jason Pereira: ... Yeah. So this has become mandatory based on different forms of governments telling different industries they have to do it. Now, why would the incentive, which sometimes people scratch their heads, is quite frankly the old... Again, back to what gets measured gets done.
Danniel Jacob: Correct.
Jason Pereira: These are players within the economy. If we don't have data on what it is they're doing, then how are we supposed to help create public policy that helps basically serve the best public interest? Right?
Daniel Jacob: Exactly.
Jason Pereira: So, it's not surprising. Now I'm going to go here on this one. This has become a... ESG has become a highly politicized acronym in the US, right? Absurdly so. And we were just to talking about the software beforehand. Talk to me about what you see going on right now and how you think it's potentially misguided.
Daniel Jacob: I think there's definitely an established economy that is not necessarily wanting the change to happen. It's a necessary change as we have been operating in a way that doesn't consider the very environment we depend on to survive, as economies and societies. And now that this has... It's called internalizing externalities or pricing externalities. It's the impact of doing business that we are now trying to integrate. And by wholly pricing those in, it will transition a large number of organization or industries to adapt. And there's a lot of resistance to change. And it's very easy when you don't really understand the intricacies of, for example, the risk perspective, which is just good business practice to label them as a thing like ESG is a thing and then just cancel it or try to avoid it because that you'll need to a change or need to adapt accordingly. And it's tough. This is why we're called Changing Habits, because literally it's changing your everyday personal and professional decision habits. It's how you select suppliers. What kind of material do you buy? What kind of products do you purchase? What kind of the services and products you will work on developing and bringing to market? It changes a lot of things and change is uncomfortable. So this is what, I think, there's kind of a movement to try to stay as it is, but the environment is definitely reacting with climate change impact, et cetera, and society. Obviously issues that we're currently living in. It forces us to change and the sooner we'll change, the easier it will be down the road. The more we're trying to counteract that influence or that transition, the more painful it will be down the road.
Jason Pereira: Yeah, that's interesting. I look at the protest as from... Okay, logical to ridiculous, right? You've got entire states banning it now, which really makes no sense in some cases. But I get it. When you think about it, the ones who get a pushback are the ones who can't or are already in a bad E, S, and G standpoint. They're terrible polluters, they're companies that basically pay their people next to nothing, terrible work conditions, or their governance structure. I always laugh at the governance structure. If you got a problem with governance as an executive, and you're a publicly traded company, I don't want to invest in you, because there's the agency problem right there. You're supposed to be working on behalf of shareholders. So, it's no surprise that people who in one of those three camps are to be resistant to it. It's also no surprise that states like Texas don't want to be involved, don't want their pension investing in companies that are basically not investing in oil and gas. That are excluding that because Hey, there are economies dependent upon their jobs are dependent on upon it.
I get that argument, right? I'm not saying I fully agree with that argument, but I get that argument. The political rhetoric has gone completely ridiculous, where this is socialism and all this other stuff. But at the end of the day, I think it's... I'm going to counter this. This is freedom. Okay. This is freedom. Why is this freedom? Because as investors, we should be empowered with as much information as possible, make decisions that we wish to make on what we want to invest in. And if investors care about... I'm going to pick on anything, deforestation, how much plastic goes into the ocean, whatever it is, I don't care what the metric is. If it's important to them, they should have the freedom to be any data, to make decisions logically in line with that. So, to getting on my little soapbox here, is this is all about consumer choice and I'm all for consumer choice.
Daniel Jacob: There's two things here. Number one is that there's two ways to approach investment. One is you divest from something which is something that obviously a lot of people are angry about or you invest to engage, which I think is a much more virtuous and positive driver of change. You basically invest, and then you work with the individuals in place to adapt and transition the business model in a way that you make them understand the risk associated with continuing with this business model. So, I think that's extremely interesting. The second item I wanted to talk about, especially from a retail investor perspective, is that more and more organization and financial institution are creating products that allow you, as a retail investor to invest in, let's say, clusters of the market or industries that are generating positive impact on, say, water, air, greenhouse gas, carbon abatement, et cetera, which is increasingly becoming prevalent. So you see a lot of, especially the FinTech, are pretty good at direct retail financing products and they're increasingly engaging in theme-based investing products, which I think is extremely interesting. And we'll probably see that growing in the future.
Daniel Jacob: Yep. I agree.
Jason Pereira: And I agree with you on the engaging piece, but again, I think people should the right to choose that.
Daniel Jacob: Mm-hmm.
Jason Pereira: I've had clients who've wanted fossil fuel exclusion for very deeply personal reasons having to do with their background or their job and their life experience, to tell people that they... Sorry, it's not an option. If you want to buy an ETF, it's just... It's silly. It's foolish.It's about respecting their personal vision, their personal values. So, we should always be looking to do that. Okay. So getting off the soapbox and going back to what it is you do. So, basically talk to me about the length of a normal engagement. At what point... How long does it take to start implementing this and seeing real change within the business and being able to hit these metrics? How long these engagements go before people are feeling that they're hitting traction?
Daniel Jacob: Very great question. It really depends on the maturity of the organizations we engage in. So, the first step will be to really understand where they stand. How much work they've done in the past, how much knowledge do they internally have, how aligned their senior management and Board of Director is on these topics. The first element would be like, where are you? We haven't done anything. We need to work on baseline and materiality. So, baseline is identifying what you've done, because most companies have done stuff, they just haven't labeled it as sustainable or it's fragmented across different functions or communication material, et cetera. So, the first step would be to do the baseline. Then if they haven't done already is to identify the top five or 10 ESG topics on which they should be putting the focus on. So, that's the materiality assessment. Again, they might or might not have done that already, but we'll take them more there they are and we'll try to make them progress further. Once they've done materiality, the point is to quantify them. How much of these issues have you quantified and put into metrics yet? None? Great. We'll start from there. You have some? Great. What kind of tools are you using? Are you using Excel based tool to do your greenhouse gas calculations? It's going to work for a while, but I can tell you, it's going to be very workflow intensive. You probably need a software at that point. So, we can help you find the best software that will help you alleviate a lot of that manual workload that's required and also make it a lot more robust and potentially open the door to future certification or audits that will likely going to happen. And then once you go from implementing, or at least you've implemented a reporting software or data management software, then it becomes so much easier to start doing strategy, to start extracting meaningful information, doing some analysis, including that figures or those numbers into business plans, business cases, feasibility studies for strategies to influence your future product and services, deployment, and potentially some of your internal processes.
So, if a company hasn't done anything, we'll start with baseline materiality. If there are any advanced, we'll be like, okay, quantification reporting or data management software. And this is where the entire economy is going. The clients that we've been talking to, yes, are aware of all the politicization and issues and discussions, but they are seeing this as a way to stay in business over time and to ensure long term sustainability of their businesses. So, the sooner they integrate some of these [inaudible 00:27:53] into their decision making and strategy thinking, the better they come off.
Jason Pereira: So, thank you so much for taking the time, Daniel. I think we did a good job of covering what ESG is, how metrics are incorporated in the business, and how you help with that. Where can people find you if they're interested in learning more?
Daniel Jacob: So, you can find... We're very present on LinkedIn, Changing Habit Solutions. Our website is quite straightforward, Changing Habits Thoughts Solutions. And this is where we basically have our main presence. If you want to engage on LinkedIn or just send us an email, we usually start with an introduction call to understand what ESG means for your organization based on your industry. And then we go from there. There's a number of tools. We also have a diagnostic tool that's very simple, mainly for SMEs to start looking at, "Hey, well, where do you stand on these issues? How mature are you?" And you'll be able to, in a DIY way, figure out what it entails and where you are, so that's a great place to start, or directly book a small call with us and we'll identify some of these issues for you.
Jason Pereira: Excellent. Daniel, thank you so much. Appreciate the time.
Daniel Jacob: Thank you, Jason.
Jason Pereira: That was Daniel Jacob of Changing Habits. Hope you enjoyed that. And if you're thinking about incorporating ESG into your business, please take a look at what it is they're doing and educate yourself and potentially seek out their support. As always, if you enjoy this podcast, please leave a review on Apple podcast, SoundCloud, Stitcher, Spotify, or wherever you get your podcast. Until next time, take care.
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