(Article published in L’AUTOMOBILE Collision magazine, April 2024)

By Anne Bourgoin

Environmental, social and governance (ESG) factors have become top priorities for many companies. Not only does this meet the growing sustainability expectations of customers and investors, but it can also help strengthen a company’s long-term competitiveness and resilience.

Why integrate ESG into your company’s operations? “All companies need to consider environmental, social and governance issues. This is not a fad, but a profound transformation of the world of finance and of all major companies on the planet. Of course, financial performance is still relevant, but the way a company does things environmentally, socially and in terms of governance will define its financing possibilities from now on,” explains Andrée-Lise Méthot, founder and managing partner of Cycle Capital, a firm that provides innovative solutions to address the key ecological challenges facing humanity.

ESG to Mitigate Risks

Automotive companies face growing risks related to climate change, resource scarcity and social issues. Integrating ESG helps to better manage these risks and ensure the sustainability of operations. Studies also show that companies who integrate ESG into their strategy tend to perform better financially over the long term. This is partly because sustainable companies are in a better position to attract investors and customers.

How to Integrate and Adapt Them to Your Reality?

“The key is to start with things you understand well, then improve over time. You need to start small, by becoming aware of the importance of certain ESG factors in your company, and then selecting a few relevant indicators to measure over time,” explains Ms. Méthot.

From the outset, it’s vital to define clear ESG objectives and integrate them into the overall strategy. It’s essential to involve employees in the decision-making process to ensure everyone’s participation. “It’s also important to be educational, i.e., to explain to employees and management [. . .] why the company is embarking on an ESG initiative, what it intends to get out of it, and how it will go about it. The whole company has to get involved,” emphasizes Alia Drouin, Director of Impact Investing and Public Relations at Cycle Capital.

Assess, Manage, Measure and Communicate

Identifying the ESG risks that a company may have to overcome, then implementing measures to manage them proactively, is paramount. And, above all, don’t forget to establish key performance indicators to track progress in implementing the ESG strategy, and also to communicate progress transparently with stakeholders and all employees.

Integrating ESG will benefit any company in many ways. It will give them a clearer picture of their risk management, and a better understanding of its impact on customers, employees and the industry. It will attract talent more easily, and will be in a better position to follow and even anticipate regulatory changes, enabling it to adapt more rapidly.

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