The attention of businesses to the environment nowadays is particularly focused on how companies care for the environment, society and corporate governance. Among those interested is the European Commission which is in the process of preparing new regulations for reporting non-financial data.
Applying an ESG policy in a company may positively affect its finances, improve their credit score and increase its competitive advantage. Experts argue that soon the obligation to report progress in the field of ESG may apply not only to the largest companies, but also to smaller businesses. What actions can you take to gradually meet the ESG criteria? Can cool roof technology help with this?
What is an ESG Policy?
The ESG covers a range of 3 factors that provide a framework for producing non-financial analyses of companies, states and other organizations. Companies implement ESG policies to inform the industry, such as investors, contractors, current and potential employees or banking institutions about activities undertaken for the benefit of:
- the environment,
- corporate governance.
The ESG has redefined the importance of company values. Thanks to an in-depth analysis of these 3 parameters, it’s possible to compare companies on a common level, one not determined by financial results. The transformation of the financial market has made investors broaden their views – they now pay attention to aspects related both to credit scores, as well as non-material factors that facilitate decision-making on investment directions. Increasing people’s awareness of issues related to environmental protection, the need to ensure appropriate working conditions and transparent actions of companies resulted in the need to extend the existing concept of CSR (corporate social responsibility) to new areas.
Sustainable development – once a trend, now a responsibility
The European Union plays an important role in making the ESG policy and reporting non-financial data popular. Provisions regarding these two issues have been included in the directives since 2011.
A breakthrough moment for non-financial reporting was the introduction of Directive 2014/95 / EU. It established rules for reporting non-financial information by large companies, thereby amending the Accounting Directive 2013/34 / EU. From now on, companies have to include non-financial statements in their annual reports, starting in 2018. As already mentioned, the regulations only apply to large public companies with more than 500 employees. In other words, about 6,000 large companies and groups across the EU were required to report their non-financial data. In 2020, however, the European Commission conducted a public consultation on the revision of that directive. It is to support the increase in quality and comparability of the disclosed data and support responsible investing and, as a result, make the economy greener. The obligation to report can be expected to also cover smaller businesses.
It’s the effect that counts
Companies have a certain freedom when it comes to reporting. According to the directive, reports can be prepared according to international, European or national guidelines. For example, these can be: the ISO 26000 standard, the 10 principles of the United Nations Global Compact or the OECD guidelines for multinational enterprises. The most popular standards include: Sustainability Reporting Guidelines, AA 1000, ISO 14000, ISO 26000. What’s important is that the issues relating to the company’s impact on the environment and ecology are included in each of the standards mentioned. They constitute a point of reference for companies in determining performance indicators in individual areas. They allow external auditors to evaluate the effects, but also show progress over time. Contrary to popular belief, making changes that may enrich a non-financial report doesn’t always have to mean using complex and costly tools. There are solutions that will make a difference on many levels within a few months.
The ESG policy and cool roof technology
One of the methods which influences the improvement of both environmental and social terms is the use of so-called cool roofs. It’s a proven way to improve indoor thermal comfort and reduce energy consumption. The white surface of the sheathing reflects sunlight, absorbs less heat and limits its transfer inside more effectively than the standard materials used, such as roofing felt, sheet metal or most synthetic membranes. How will such an expense translate into a non-financial report? For example, thanks to the use of this technology, a company that produces a report, e.g. according to GRI G4 standards, will be able to demonstrate an improvement in reducing energy consumption and reducing emissions. These are most of the environmental requirements included in one of three categories of specific indicators!
The COOL-R system helps to improve energy management of a building
Financial savings from air conditioning are related to the heat balance of the building. The hotter it is in a building in summer, the more the air conditioning costs. The use of a liquid, waterproof COOL-R coating on the roof, which is defined by high emissivity and reflectivity, prevents the surface from heating up and accumulating heat, and consequently does not transfer it inside. These features are expressed by one indicator – SRI (Solar Reflectance Index). COOL-R has an SRI of 107, which is very high considering that the maximum SRI level can be 120. By comparison, a standard bitumen membrane has an SRI of 22.
The temperature difference shown in the photo below was recorded on June 25, 2018 in Madrid (Spain) on a bitumen roof during the COOL-R application. Tests carried out with pyrometers clearly show that the flat surface of the warehouse sheathing heats up much less thanks to the use of the COOL-R liquid waterproof coat.
Another example is the renovation of a 38-year-old roof with an area of 25 000 m2 covered with a bituminous membrane, which was done in Madrid. The building houses a fish market with its own ice factory. As a result, when the building overheated in the summer, owners had to deal with significant costs both from cooling the building and increased ice production to keep fresh goods at a very low temperature. The ice factory itself produced as much as 20 tons of ice a day, which kept the sales stands cool.
Central Fish Market, Madrid, Spain – 25000m2
After the COOL-R coating was applied, the temperature indoors was reduced by 7°C, which translated into a reduction in the load on air conditioning systems and energy consumption, as well as improved storage conditions and less need for ice. Thus, after 38 years of use, the roof above the market had been thoroughly renovated, and its function was modernized and adapted to current construction standards.
Values of cost savings indicated in the material are exemplary. Values for a specific object are dependent on many individual parameters of this object, its location and existing infrastructure.
The graphs show that after using COOL-R, the thermal gain during summer was much lower than of any other roofing materials compared in the study. It’s been estimated that the savings on air conditioning devices in the building in this case could range from about EUR 36,971 to even EUR 154,066 per year, depending on the type of roof sheathing and thermal insulation used. How is it possible? Because of its properties, a COOL-R layer reduces heat transmission through the roof partition thanks to its high ability to reflect sunlight and its high emissivity, preventing heat from accumulating and transmitting inside. This way, the demand for electricity needed to cool down a building is lowered, which allows to reduce electricity bills, and in cases of buildings without AC devices, the temperature in summer is reduced, improving thermal conditions.
Benefits for businesses
Cool roofs, covered with a waterproof COOL-R coating, for example, provide property owners with a number of benefits in terms of ESG factors: energy savings, improved comfort and work conditions for employees, reduced maintenance and roof replacement costs, reduction of urban heat islands and CO2 emissions to the atmosphere.
Incorporating ESG criteria into a company’s strategy may have a positive impact on financial results, reduce workplace risks and assist in getting financing, as well as increase the company’s competitive advantages. Currently, the business environment’s attention is especially focused on how companies care about the environment, society and corporate governance. In order to gradually improve a company on the market, implementing solutions that will help achieve goals aligned with the ESG policy are worth looking into. This is confirmed by global research. In a Deloitte survey from 2020, which covered over 2,000 board members from 19 countries, eight out of ten executives indicated that in 2019 their companies had developed products or services that had a positive impact on society or the environment. On top of that, as much as 88 percent assessed that these efforts brought income to the company.