t’s widely acknowledged that ESG (Environmental, Social, and Governance) principles guide organizations in integrating sustainability considerations into their operations. Metrics on water and energy use in particular play an important role when assessing ESG performance and impact. From optimizing efficiency and reducing costs to mitigating environmental impact and fostering sustainable growth, understanding the significance of responsible resource consumption is paramount for companies in today's world. 

The role of ESG in water and energy management 

Upon hearing the phrase, "water and energy use," your mind might naturally jump to the environmental aspect of ESG. That’s not entirely the case, however. It’s important to recognize that the benefits of responsible resource management (or the consequences of irresponsible management) actually extend to all three pillars of your ESG strategy. 

Companies should take steps to improve their water use and energy use for several compelling reasons. Take a look at the list below to see how your company's approach to water and energy can affect multiple areas of your operations:

• Environmental Stewardship: Water scarcity and climate change are pressing global challenges. By improving water use efficiency and reducing energy consumption, companies can significantly decrease their environmental footprint. This helps protect ecosystems, conserve water resources, and mitigate greenhouse gas emissions— contributing to a more sustainable planet and healthier communities within which to do business. 

• Regulatory Compliance: Governments and regulatory bodies worldwide are rolling out stricter environmental regulations and mandates. By proactively improving water use and energy consumption, companies can ensure compliance and avoid potential fines or penalties. Doing so also helps maintain a good standing with regulatory authorities. 

• Risk Mitigation: Water scarcity and energy insecurity pose significant operational risks. Companies can build their resilience to potential disruptions by putting in place measures to reduce dependence on finite resources. Diversifying water sources, embracing renewable energy, and implementing backup energy systems mitigate risks associated with supply chain disruptions, price volatility, and resource scarcity.

• Cost Savings and Efficiency: Optimizing water and energy efficiency directly translates into cost savings for businesses. By adopting energy-efficient technologies and implementing conservation measures, companies can significantly reduce operational expenses—resulting in lower utility bills and a boost to the bottom line. 

• Reputation and Stakeholder Trust: Investors, consumers and other stakeholders increasingly prioritize ESG and impact factors when making decisions. Demonstrating a proven commitment to sustainability helps attract and retain a more engaged and purpose-driven workforce. It also creates a more positive relationship with customers and communities. 

• Investor Demand: ESG / impact considerations are becoming fundamental for companies' long-term success. Investors increasingly assess ESG performance when making investment decisions. They know that strong ESG performance is a proxy for the overall health and direction of a business. By prioritizing sustainability, companies are opening their doors to more sources of capital and a competitive edge in the marketplace. 

• Social Responsibility and Community Engagement: Water scarcity and energy access are critical social issues. By managing water resources responsibly, companies contribute to water security and support communities in need. Engaging in sustainable energy practices helps address energy poverty and promotes access to clean, reliable energy. Demonstrating social responsibility solidifies a company's social license to operate and strengthens relationships with local communities.

• Innovation and Competitive Advantage: Taking steps to improve water use and energy consumption fosters innovation and positions companies as leaders in their industries. Embracing sustainable practices often drives the development of new technologies, processes, and products. This innovation can lead to a competitive advantage, increased market share, and access to emerging markets focused on sustainability.

Now that you’ve gained a solid understanding of the basics of water and energy use, it's time to delve into the practical steps of measuring and improving your business’s resource consumption strategy. How can your business take action and make a positive impact on both your bottom line and the world around us? Find out in this next article, “5 Steps to Improving Water & Energy Use: A Guide for Sustainable Businesses.”