esg innovations

Much as we love to be in the ESG (environmental social and corporate governance) league, it is another matter to be able to be considered ESG compliant. However, there is also an increase in market business executives who said they were familiar with the subject but it becomes increasingly difficult to attain into an ESG fraternity. It even becomes difficult to become outstanding in view of everybody trying its level best to incorporate ESG practises.

ESG Baiscs

When we talk about Environmental, Social and Corporate Governance (ESG) it is about what we invest in. First of all it is about the environment – basically what our investment would do to the environment. So you have things that are termed Green like solar energy which is purportedly having a low carbon footprint. Still we have to see the overall picture as some green projects are actually carbon negative because they do produce more carbon dioxide like the electric vehicle project where we actually produce more carbon dioxide by way of smelting iron into its steel component. But if we were to use sustainable fiber to build the vehicle body, then we will have a smaller carbon footprint!

Then the next thing we have to consider is what it will do to the social environment. When we invest into something and as we are going to consider whether it is ESG compliant, we would have to consider the social impact that will come out of the investment. A very clear example is the AI enable robot – will smart robots displace the workforce? In the first place, we enable robots because we have to replace the worker for certain reasons. Our first thought is that we have replaced it with a reliable worker that is easier to handle. But unfortunately we have also a worker who is going to lose his/her job which will bring about societal chaos. Of course you can say that we will need someone to operate the robot so perhaps in losing one job, we might have to create two other jobs never mind if we were to have to change our training profile.

The third thing is about corporate governance which incidentally is already present as we cannot run a corporation without a set of rules. In terms of ESG compliance, corporate governance is about how an organization is led and managed. ESG analysts will seek to understand better how leadership’s Incentives (bonus!) are aligned with stakeholder expectations, how shareholder rights are viewed , served and honored, and what types of internal controls exist to promote transparency and accountability on the part of leadership. Unfortunately when we talk about transparency, it is always a gray area as smart managers can always put up good looking front which unknowingly bears an ugly façade to it. That is why you have ENRON.

You will not only need to have ES and Corporate Governance but you will also need to be sustainable. And what is sustainable? The UN Sustainable Development Goals says:

Goal 1: No poverty

Goal 2: Zero hunger

Goal 3: Good health and well-being

Goal 4: Quality education

Goal 5: Gender equality

Goal 6: Clean water and sanitation

Goal 7: Affordable and clean energy

Goal 8: Decent work and economic growth

Goal 9: Industry, Innovation and Infrastructure

Goal 10: Reduce income inequality within and among countries

Goal 11: Sustainable cities and communities

Goal 12: Ensure sustainable consumption and production patterns

Goal 13: Take urgent action to combat climate change and its impacts by regulating emissions and promoting developments in renewable energy

desert scene

Goal 14: Conserve and sustainably use the oceans, seas and marine resources for sustainable development.

Goal 15: Protect, restore and promote sustainable use of terrestrial ecosystems, sustainably manage forests, combat desertification, and halt and reverse land degradation and halt biodiversity loss

Goal 16: Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels.

Goal 17: Strengthen the means of implementation and revitalize the global partnership for sustainable development.

Well, that is a mouthful and all you have to do is just to attain any one in order to be considered ESG complaint! Well, that is all you have it - dwelling in goals are not exicting at all!

The main reason why corporates have to consider ESG reporting is that we now have a changing climate brought about by the excess of fossil fuel burning. Then there is this clearing of forest for the sake of planting crops as if the western enclave had not done it before! Certainly it is hard to measure how sustainable is the planting of oil crops as compared to food crops – both having the need to clear the land. There was this negative aspect of land clearing that suggests that we will ultimately reduce our carbon dioxide absorption but there are ways to replace the forest with crops that although they are of smaller size does absorb more of the carbon. Anyway, rhetoric aside, sustainability will not happen when we are talking about the unimpeded explosion of population – would it be better to curtail the explosion of population when we talk about sustainability.

At the other front of the ESG debate, the United Nations is urging all businesses to integrate sustainability into their decision making episode, stating that ESG and sustainability principles will enable corporates to operate responsibly and sustainability in the corporate landscape. It thus becomes complicated as it is not easy to measure sustainability - there is no platform to help measure sustainability, only your perception as to whether it is sustainable or not. But as a whole, corporate directorates do often easily nail it as sustainable when they actually put the investment into practice, and how else can you measure whether it is sustainable and profitable or not. If it is found to be unsustainable, then they can back track or perhaps putting their other investment into carbon buying. In the final analysis, whether an investment will adversely affect the climate and thus society, there need a proper analysis of the outcome to see whether the action is reversible.Maybe some innovation will do the trick!

Since the coining of ESG by UN Global Compact Initiatives in 2004, the corporates interest has been waning. By 2022, those who were interested in using ESG compliant and had been interviewed had gone downhill to 60% and had since dwindled to 40% meaning we will need a new catch phrase to propel productivity. In truth focusing on ESG elements has not brought about productivity and thus profit – so there need to defocus away from ESG for the future. One way to look at it is to quickly turn into another direction but which. The nearest answer is to quickly look at innovation – innovate your product and innovation your delivery system. For only innovation will be able to drive your corporation to a new height and perhaps you can look at an updated version of ESG – ESG plus Innovation.

How then can companies differentiate themselves further through ESG?

The answer probably lies in being innovative – something that most executives should put it as a priority. Unfortunately, it is easier said than done but there is a way. The most practical way to be an outstanding member of the ESG community is to look at ways that others will not have thought of. You will need to look to either innovate your products or your business delivery method for a start. As for product innovation, you will need to put to your engineers to further improve on the carbon footprint of both the production and usage of the concerned product – things like efficiencies and product lifecycles should be prioritized. It used to be that innovation is always not a priority because you have been doing well with your offer but as corporates are aware of the need to embrace ESG, it becomes an urgent matter to be pursued since everyone is trying to measure your response. This becomes a top priority as governments and non-governmental entities are also putting pressure on corporates to play their part in ensuring a sustainable economy.

What is ESG Innovate?

Unlike most ESG, the innovative version is the infusion of novel ideas be it in the physical form or in the method form. Let’s take an example. We are wont of talking about green and carbon negative so let us look at an example of investing in a green field. Let us invest in a plantation – that of hemp. In most certainty, most people would not want to invest in a hemp plantation what not with its negative perspective – hemp was once banned due to its association with hallucination effect. We should however view it as a sun rise industry because there are a lot of uses, like it can be made into fiber ropes, baskets, building blocks and even medicine. It is of course top of the green agenda as far as sustainability is concerned – hemp plantation needs very little water and fertilizers for a start. It is also fast growing, it just take four months!

For a new industry, there are plenty of upsides to it. There is very little competition and there is a diverse stream of new products – where you can spend your time innovating. And you state your price rather than you follow others. Where it is carbon trading is concerned, you will profit even if you were not to sell your product – of course you sell it for the carbon sink. Hemp growing takes in at least sixty percent of the carbon – that is it absorbs carbon, thus making it a useful carbon sink product. Furthermore, you can also grow it in stacked form as it is only six feet in height fully grown. That will be multi- level hemp factory – any taker? That is about what we call ESG Innovate where we spin the thing around so that it becomes something new to the market and we have not talk about the new medical use yet.

How about white hydrogen?

Yes, you read right - white hydrogen, those almost pure hydrogen that you mine underground. Indeed, the world would not have to burn fossile fuel as there is an abundant of hydrogen trapped under ground. You just have to know where to tap it as it is found in most places - some are accessible 5 meters underground. You will find more of it if only you know how to detect it. there will be new devices that is able to sense the presence of white hydrogen and you can even get into this industry. With white hydrogen you can very well forget about tapping those dirty hydrogen from the petroleum industry. Go green and go real green with white hydrogen!

Ditch all your land based solar!

Yes, why do we still cling onto the undependable solar panel? Don't the sun hide away from shining as it wish and why do you need expensive batteries (not very green) to store its energy? We can't depend on these solar panels (even if they are made from perovskite) as we can't depend on the sun to shine away. However, what if we were to float a space panel (yap, into space), something made from light material and use microwave to transmit electricity down back to earth! To be positive, such a technique has been proven successful but due to its cost there will be more research done to it. But anuway, it is a viable concept because we will be able to capture the sun on a twenty four hours basis. Yes, perhaps it is time to ditch all those solar systems that take a huge amount of energy to produce.

On the investment side, there is always this urge to invest in the most potential of company that is you would not want to put your money into a company that just scrap through. Furthermore, in the light of ESG investing, it would not be attractive enough to plough your money into a company that only paid lip service to present day demands. Because in today’s environment where everyone seems to have some thoughts about ESG reporting, there is this added incentive to invest in an entity that has something new and potential money earner – this will be the better criterial if you are comfortable with innovations the kind that are hopeful to ride over the economic downturns. Look for companies that turn water into a revenue, like those that have innovative techniques to tap water from the atmosphere. Water is life – it becomes a critical equation when you talk about the ice burgh’s melting at the poles. Furthermore, companies investing more in R&D and patents have better ESG performances not to mention that they are more attractable to mergers. Additionally, when you have innovations, that is what investors would like to look at. In this drab world, the only thing that differentiates one from another is innovation. So in short, Innovation with ESG will give you a shot in the arm by pulling away from your drab competitors. You will not only look good in your ESG reporting but you will also look good with your investors. But just talking about innovation is easy - the part where you bring about innovation is difficult to achieve. In case you are in doubt as to whether you can bring about innovation, please give us a thought, for we can help.

ESG requirements will necessitate change

In order to look good on your ESG reporting, you will need to make changes to your way of making your products because you will have to be green and look green. Now, in order to look green, you will need to tweak your product or your services to reduce your carbon foot print - and that is easier said than done. So if you are into making changes, why not go a step further to introduce innovative products and services that will stem your leadership your sector - take the opportunity to leap frog from your competitors. It is only through ESG Innovation that you can achieve leadership which will look good from your investors point of view.

Esg aims

Create Long-Term Sustainability Value?

ESG goals are company-wide objectives that help an organization meet environmental, social, and corporate governance. ESG ratings impact profitability – regardless of what industry your company is in. People like to know that the companies they interact with and buy from are companies that do good (in an environmental sense) in the world. Things like will your action leave a trail of broken down structures matters. Some environmental impacts cannot be rectified and thus leave it to our next generation to absorb. As the ice bergs melt with rapid space, it would bear upon us to help restore the beautiful environment that we are enjoying now – but once entropy happens, there will be very little to repair. It thus behoves investors to know what the impact to society is where they make the investments. For a start, we should not invest in fossils even so that they can help relief us in the short term.

The other important paradigm is sustainability. Being green is not good enough as we have to have a circular economy – reduce waste as far as possible because it would land up to our future generations to clean up.

Innovation is the 21 century’s challenge

As ESG compliance is the rage now, efforts must be made to change – to make appropriate change to your product range and business deliveries. However, it is still early for the smaller enterprises to be ESG compliant as most of them do not have a practicable way to move or even some of them have not been enlightened to the need to be ESG compliant – some small entities that only cater to the needs of a rural population need not comply, so they think. As our economy is taken over by the millennials, the laggards will have to contend with a decline of their businesses, so they will need to catch up with probably innovative ways to change for the better. Unfortunately as far as innovation is concerned you cannot just simply put into reverse gear to change course for you will need to do research into what the market has to offer and thence what your team can do to put yourself into the lead.

ESG and the BOARD

Which comes first? Well, first of all we have to deal with the board because they are the one to effect change – they will determine how far the ESG will go. It is also all about money without which nothing works. In order to drive compliance with ESG, it is better that the board can see and feel money; otherwise all that is ESG will become a whitewash. The board will always be in front to allay the shareholders and their actions speak louder than anything. The board will drive the vehicle but the money is the one who drive the board. So first thing first, reward the board so that they can incentivize their actions. Thus any innovation will come only if the board can see that they can affect their pockets. To actually drive innovation is a difficult task – there might be too many who supports no action. Take care of the board and they will take care of innovations.

Outsource Innovation

If you can’t do it then outsource it – for innovation. Time is the essence and every seconds count for you will need to know that the others out there don’t sleep over the matter, what more when they can do research by utilising LLM (large language model) and doing the work via an auto mode. But since innovation is not the hallmark of the LLM, there is a place for you to innovate, either on your own or with an outside partner. Here at Patentagentip, we can offer our help if you would like to outsource your innovation and not only that, we will do it an innovative way that you can use to outperform your competitors. Give us a call.