Ten or 15 years ago when ESG first became a “thing,” this corporate practice was more of a marketing tactic than the business strategy it has become. Regardless of how it got its start, ESG has been a crucial means of demonstrating to socially conscious investors how utilities and other organizations are making an impact across these three criteria: environmental, social and governance
In recent years, ESG investing has skyrocketed, with some 66% of financial leaders saying that sustainable investing is their number one growth opportunity. Of course, this dramatic uptick means that ESG reporting is now more important than ever.
“ESG is a measure of business activities and their impact on targets that are meaningful to stakeholders,” explains Jack McCabe, Vice President and General Manager of Utility Vegetation Management Solutions for the Davey Resource Group (DRG), a subsidiary of The Davey Tree Expert Company. “Every company, large or small, has always had a perceived reputation. ESG emerged in the 2010s as public and media concerns rose with respect to what companies were doing. At first, it was the compliance stick that drove businesses, including utilities, to focus on ESG. Soon, it became a big enough deal that they started allocating resources toward ESG. Now, the stick has been replaced with a carrot. That’s due, in large part, to the many benefits ESG can have on the utilities themselves, not to mention their investors, customers and employees.”
Benefits of ESG for Utilities
One such benefit for utilities is less government interference and regulation—but only if the utility industry as a whole voluntarily performs with their ESG corporate practices. That’s a good thing and it also is why many utilities have decided that when it comes to sustainable practices, they are pivoting from “less” to “more” with integrated vegetation management (IVM) as their cornerstone.
So, what would prevent a utility from leveraging IVM and advancing their voluntary ESG? Simply put, cost.
McCabe explains, “Change is hard. For some utilities, the transition from traditional vegetation management to IVM can feel daunting and expensive. But it doesn’t have to be. With IVM, there’s much better access to capital through investors, loans, and support for system improvements. The economic benefits go well beyond the annual budget.”
For Davey, utilities who apply IVM programmatically for the long term can reap positive results on their investment. Those results, for example, include fewer outages. Fewer outages not only save money, they’re also directly correlated to improved safety and reliability of the grid.
Further, a well-crafted and successfully implemented IVM strategy not only increases economic performance, it also positively impacts environmental outcomes, which improves regulatory compliance. The trickle-down effect continues as utilities experience better stakeholder relationships and increased employee satisfaction.
Don’t believe it?
You only have to look at the data along with net present value (NPV) to understand the truth of this. Davey has developed a tool to help utilities calculate the benefits. Created by vegetation managers for vegetation managers, this tool takes relevant data and translates it into something both measurable and meaningful. More importantly, it provides tangible proof that when IVM is properly implemented in as many places as possible, utilities can enhance their long-term environmental, social, governance and economic performance.
New York Power Authority Launches ESG Reporting Pilot
Case in point, New York Power Authority (NYPA). This state-owned transmission company produces renewable energy for municipalities and large corporations and has been at the forefront of IVM for more than 20 years. NYPA started by focusing on land management and compatible vegetation plant communities before recently adding such new environmentally friendly technologies as electric chainsaws, electric UTVs and drones to its program.
Despite its industry-leading work, NYPA refused to rest on its laurels. Instead, in late 2020 it approved a strategic plan called VISION2030; a plan to elevate its ESG efforts and reporting to higher levels.
“Even though the Power Authority isn’t looking at investors like an investor-owned utility, we have metrics related directly to state-mandated requirements. Just like investor-owned utilities, we need to measure these metrics and score high marks on our ESG indices,” explains Lewis Payne, NYPA’s manager ROW/Environmental. “VISION2030 is our answer to the question of where we we’re goin g with sustainability and biodiversity in the next 10 years.”
Just months after adopting VISION2030, NYPA teamed up with DRG for a pilot project that focuses on ESG in its rights-of-way (ROWs). The goal of the pilot program is to take NYPA’s expansive collection of ROW data and correlate it directly to its ESG reporting metrics and sustainability planning. DRG’s role is to guide the process, steer communication and reporting tool development and supplement geospatial database and emissions calculations.
“At the start of the pilot, we looked at what it takes to run our operation in terms of our carbon footprint within our ROWs,” says Payne. “We brought in our forestry and sustainability teams to think about breaking the elements apart so we could identify measurable targets. We want to show that what we’re doing over time is brought forward so that people who aren’t in the industry can see we don’t run scorched earth programs. The truth is, what we’ve been doing for decades is sustainability, long before ‘sustainability’ was cool. This ESG reporting pilot project is simply going to help us prove it.”
For utilities like NYPA that champion ESG, it’s important to also integrate ROW VM activities into sustainability reporting metrics. Why? Because ESG is a measure of business activities and their impact on targets that are meaningful to stakeholders and ROW stewardship efforts fit the bill. Practicing environmental stewardship by transforming ROWs into conservation areas is a perfect example of this. For NYPA this has meant identifying ROW activity data sources that are, ideally, part of normal business processes, then capturing and capitalizing on contributions ROW land management has made to ESG priority issues.
For DRG, there’s an even bigger purpose for the pilot project; and that’s to extend it to the entire utility industry.
“We came into this with the intention of providing proof of concept for all utilities,” explains McCabe. “Our goal is to inspire utilities to change the way they think about IVM and the data they have on it. We hope to see utilities use this information to accelerate their sustainability planning and progress, as well as elevate their ESG reporting. We’re grateful to NYPA because they’re helping us demonstrate that the data can be converted directly to their metrics for ESG reporting purposes.”
Considerations for ESG Reporting
As a general rule, reporting on ESG metrics ensures that utilities have the license to do business, that they’re operating within their sector and that they are compliant with government mandates and regulations.
For utilities who are looking to take their ESG reporting to the next level, here are some questions they can ask themselves:
- How is our governance?
- What are we doing to increase sustainability and preserve the future of the environment?
- Are we compliant?
- What data do we already have?
- Do we have someone overseeing our sustainability practices?
- Are we doing anything that could damage or risk our resources?
- Have we implemented an IVM program and are we invested in it for the long term?
- How are we reporting up through the programs that have indices?
- Are we getting the credit we’ve earned for our ESG efforts?
- Are we open to improving our ESG reporting and, if so, how?
With answers to these questions, utilities will have the opportunity to assess biodiversity, track changes over time, evaluate successes and promote sustainability. Further, they will be empowered to transform their ROWs from mere parcels of land into something far more valuable: true assets that benefit the utility, its investors and the customers and communities it serves.
NYPA is proof positive of this, says Payne.
“We’ve been using a GIS platform since 1998 and became the first wholly digital utility in North America. Recently we began using a pollinator scorecard to evaluate habitat on the right-of-way. Currently we are tracking 600 plots on 700 miles of line and are expecting to put in another 600 plots on the remaining system. I carry a lot of data on my digital platform, but that’s nothing compared to the value of seeing what the data says. Not only does it help us maintain our rich biodiverse habitats, but it also challenges us to think through things. For example, if the data tells me there are a good number of moths in one of our ROWs, that raises the question of whether or not I can prove that it is a bat habitat. Thereby showing when we manage rights-of-way employing IVM we are enhancing bat habitat not harming it. The pilot project is helping us pull out this kind of data—data that we already have—and leverage it to show what we’re doing to advance sustainability.”
Jill Golden is a project manager in corporate communications for The Davey Tree Expert Company, an employee-owned corporation that provides tree, utility, lawn care and environmental consulting services in the green industry throughout the United States and Canada. Golden is a graduate of Kent State University in Kent, Ohio, and holds a bachelor’s degree in public relations. She resides in Cleveland, Ohio, and can be reached at [email protected]