What Is ESG?
Environmental, Social, and Governance (ESG) refer to a set of corporate practices aimed at improving a company’s social goals. ESG initiatives are often associated with sustainability, ethical sourcing, and human rights.
Many companies are now incorporating ESG into their business models in order to appeal to a wider range of consumers and investors. As a result, ESG has become an important consideration for franchisees.
There are many benefits to implementing ESG initiatives as a franchisee. ESG can help improve brand reputation, attract new customers, and build trust with existing customers. In addition, ESG can help reduce operating costs and create a more sustainable business model.
Franchise brands that seek to incorporate environmental, social, and governance measures into their business models also tend to be more profitable and boast higher stock prices. Companies that have famously incorporated ESG methods into their business models include Google, Nestle, Microsoft, Unilever, Johnson & Johnson, and Virgin Atlantic.
When selecting a franchise system, you should consider whether the company incorporates ESG in its business model. This includes:
- Protecting the environment
- Fair treatment of employees
- Protecting consumers
- Managing and mitigating conflicts of interest
- Providing transparency and accountability
The Following ESG Practices Can Be Incorporated Into Any Franchise System:
- Using renewable energy
- Reducing waste
- Promoting recycling
- Improving employee safety
- Creating an ethical sourcing policy
- Using sustainable materials
- Supporting local economies
- Implementing green building practices
- Supporting renewable energy initiatives
- Providing employee training on ESG topics
- Encouraging employees to get involved in ESG initiatives outside of work
Some franchise systems have worked toward ESG efforts since their inception. Others recently started incorporating these practices. What is important is that a company has a clear plan for how ESG will be incorporated into its franchise system. This plan should be communicated to franchisees so they can make informed decisions about whether the company is the right fit for them.
The best way to learn about a company’s ESG initiatives is to speak with current and former franchisees. They can provide insights into how well the company has implemented ESG and whether it has had a positive impact on their business.
Why Is It Important For Me To Understand ESG?
The world is changing rapidly, and as technology continues to advance, the ways in which we interact and conduct business is changing too. As a result, we face new challenges, such as climate change, inequality, and human rights abuses.
Incorporating ESG into your franchise system means you’ll be doing your part to help the planet and protect the people you work with.
How Can I Measure ESG?
It’s hard to quantify ESG, but you can start by looking at a company’s public statements and disclosures. Many large companies have publicly stated their ESG commitments, including:
You can also look at a company’s annual report or sustainability report. These documents usually include information on how the company manages its ESG initiatives and what progress has been made. Also, pay attention to how these policies are communicated to franchisees, and the level of support provided to franchisees in implementing ESG initiatives.
How Can I Be Sure A Company Is Committed To ESG?
There are a few different ways to check a company’s commitment to ESG. You can ask the company directly, or you can ask the franchisor.
Some franchisors are starting to incorporate ESG into their business model. They often have a public ESG policy that guides their plan to meet their goals.
If you’re concerned that a company may not be committed to ESG, you can start by asking for a company brochure or application. Then, if you’re still concerned, you can contact the franchisor and ask them to share their ESG policies and commitments.
What’s My Responsibility As A Franchisee?
As a franchisee, you should be aware of a company’s ESG practices. If you want to know more about your company’s ESG practices, you can start by asking the franchisor for a brochure or application. You can also contact the franchisor to learn more.
An excellent place to start is the franchise disclosure document (FDD). The FDD will provide you with an overview of the franchise system, including the company’s ESG policies.
Once you have reviewed the company’s ESG policies, you can decide whether you want to implement them in your franchise. If you do decide to implement ESG practices, you should develop a plan for how you will incorporate them into your business.
Your franchisor can provide guidance on how to implement ESG practices in your franchise. In addition, there are many resources available online and from other organizations that can help you get started.
Many franchisors will have a section in their FDD that discusses the franchisor’s ESG practices. Here you’ll find a summary of the franchisor’s commitments and details about how they plan to meet them.
Franchisees are responsible for conducting their due diligence and checking the company’s ESG practices before investing in the franchise.
How Can I Choose A Franchisor That Aligns With My Values?
A franchisor that aligns with your values is important because it will help you feel comfortable with the brand you’re working with. It will also help you make the right decision when it comes time to invest.
Some questions to ask when choosing a franchise system include:
- Are the franchisor’s practices consistent with my personal values?
- Do I feel comfortable with the franchisor?
- What kind of support does the franchisor provide?
- What is the franchisor’s success rate?
- How long have they been in business?
- Have they had any lawsuits or regulatory issues?
- How do they treat their franchisees?
- How does the franchisor treat its suppliers?
- How does the franchisor treat its employees?
- How does the franchisor treat the environment?
- Does the franchisor have a clear ESG policy?
- Does the franchisor have a clear commitment to ESG?
- How transparent is the franchisor?
- Does the franchisor have a clear commitment to ESG?
- How can I find out more about the franchisor?
If you’re not sure how to proceed, you can ask your local franchise association or other franchisees who have invested in the same franchise.
GSE, a San Diego-based commercial building and energy management company, is committed to working with franchisees and helping them to excel at their ESG methodology and applications. Contact us today to learn more about our answers on improving energy efficiency, demand response, renewable solutions, and more.