The banking and investment communities are increasingly looking at environmental, social and governance (ESG) factors to identify a company's material risks and growth opportunities.
Interest in ESG factors is leading many convenience retailers, both publicly traded and privately held, to develop ESG plans and benchmarks. It’s becoming more common for financial institutions to consider ESG factors when making corporate loans, providing access to capital and providing borrowers with lower interest rates based on their sustainability profile and attention to climate risks, as well as areas such as executive pay, political affiliations and working conditions.
Ultimately, how a company approaches ESG planning and programs boils down to its values, vision and long-term goals. Whether a company is publicly traded or privately held, ESG planning is part of developing a strong and balanced long-term business strategy.
Financial institutions look at positive ESG scores as indicators of a well-run company that has a defined strategy and is focused on a long-term vision rather than short-term profits—and they adjust their lending terms accordingly.
Although ESG planning and developing an ESG framework is voluntary, businesses could be driven to ESG by more than altruistic sentiment in the near future.
The U.S. Securities and Exchange Commission proposed rules in March 2022 that would require publicly traded companies to disclose their ESG plans. Companies would be required to show to investors how certain climate-related risks can affect their finances. Risks could include the increase in severe weather, potential costs of shifting away from fossil fuels and how a company is attempting to limit its carbon footprint.
In May 2021, President Biden issued an executive order encouraging regulators to assess climate-related financial risk. Congress is also considering measures that would require increased ESG disclosures.
Telling Your ESG Story
Some convenience retailers have developed reports that showcase elements often included in an ESG report:
- Parkland published its inaugural sustainability report in 2019, signaling the company’s intentions to be transparent moving forward. Its 2021 Sustainability Report, "Drive to Zero," reflects the company's goal to achieve zero safety incidents, zero spills, zero tolerance for racism and discrimination, zero tolerance for corruption, bribery, and unethical behavior and to help governments achieve their goals of net-zero emissions by 2050.
- Kum & Go published its third sustainability report in 2021 that highlights how the company is developing clear performance indicators in key focus areas and commits to future benchmarking and materiality assessments for long-term, sustained impact.
- Casey’s, based in Ankeny, Iowa, published its commitment to environmental and social responsibility via its 2021 ESG Report—the first one created by the company.
- Alimentation Couche-Tard, which operates Circle K and other brands, published its Sustainability Report 2021 that continues to evolve its Sustainability Framework, giving its work an even stronger focus and supporting us in delivering on its commitments and targets.
- Maverik, based in Salt Lake City, Utah, published a graphics-heavy Community Impact Report.
- Wawa has built out an extensive, multi-media section to share stories on Social Purpose, including the overview report Social Purpose Highlights 2019-2020.
When bankers and potential investors ask about your sustainability initiatives, what will you be able to share?