Is ESG compliance becoming a necessity for companies to maintain their customer base and grow their business?

In this thought-provoking episode of the Innovation Meets Leadership podcast, host Natalie Born sits down with Bob Woosley, a national practice leader at Fraser and Dieter, to discuss the evolving landscape of ESG (Environmental, Social, and Governance) compliance and its impact on mid-market companies. The conversation delves into the growing pressure from public companies and government regulations on suppliers to provide decarbonization and emission information, regardless of their stance on ESG. Woosley emphasizes the importance of preparing for these requirements to avoid losing customers and hindering business growth.

00:00:00 - 00:05:59 The Evolution of ESG Compliance

- ESG started as a requirement driven by pension funds investing in private equity firms

- Private equity firms initially pushed back on ESG, but some embraced it to manage risk

- The focus on ESG compliance shifted from being seen as "woke" to a necessity for business growth

00:06:00 - 00:12:59 Supply Chain Compliance and Scope 3 Emissions

- Mid-market companies are receiving letters from customers demanding emission and decarbonization information

- California passed a law requiring companies doing business in the state to provide this information, regardless of the SEC's stance

- Scope 3 emissions, which encompass indirect emissions in a company's supply chain, are a key focus for compliance

00:13:00 - 00:18:59 The Importance of Preparing for ESG Compliance

- Mid-market companies are often unprepared to measure and report emissions, lacking internal expertise and tools

- Ignoring ESG compliance could lead to losing customers and being unable to respond to RFPs

- Companies should take steps to prepare for compliance, regardless of their political stance on the issue

00:19:00 - 00:23:59 Seeking Help for ESG Compliance

- Mid-market companies should seek help from advisory firms to assess their readiness and develop a compliance plan

- The demand for ESG compliance services is expected to grow as more companies become aware of the requirements

- Fraser and Dieter is focusing on helping mid-market suppliers comply with ESG requirements, as larger firms focus on public companies

00:24:00 - 00:26:00 Key Takeaways and Final Thoughts

- Companies should not ignore ESG compliance, as it is becoming a real requirement for maintaining and expanding their customer base

- Putting political views aside, preparing for ESG compliance is crucial for business growth

- The Private Equity 360 podcast will feature an upcoming episode on how private equity firms are addressing supply chain challenges with their portfolio companies

Quotes:

"Our North Star, It's helping companies grow and create value across their life cycle. And keeping in good stead with your customer is no joke." - Bob Woosley

"Do not sleep on ESG, put your political views aside. This is real. If you don't want to keep your customer, then fine. But if you want, if you want to expand revenue and make sure that you're ready to take on any customer that might be asking for this, then this is something you need to take seriously." - Bob Woosley

Connect with Bob:

LinkedIn: https://www.linkedin.com/in/bob-woosley-955488/

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