Article
ESG regulatory impacts to the middle market
Jan 08, 2024 · Authored by Brianna Hardy
With the middle market being the bulk of the supply chain, it's important to understand the environmental, social and governance (ESG) pressures from public companies that are trickling down and impacting the middle market.
Whether a company is privately held or not, middle market companies will need to be transparent with their ESG reporting to the level that these large companies require.
Without the in-house capability to report ESG metrics, companies are going to be less competitive in the marketplace when it comes to RFPs and maintaining contracts with large companies who require greater levels of transparency.
For many companies, understanding where they are in their ESG journey is the first step to designing and implementing a successful ESG strategy. It takes time to develop your reporting structure and to incorporate ESG initiatives into your company strategy. Begin by evaluating your ESG strategy, risk and reporting needs now.
Why should companies dive headfirst?
- Regulatory demand and implications to supply chain with increased compliance and reporting requirements
- Stakeholder demand and supply chain requests for sustainability metrics
- Talent attraction and retention
- Market competitiveness and new access to capital
- Value creation from cost savings and energy efficiency through transition activities
- Risk mitigation (economical, transitional, environmental, reputational, etc.)
- Reporting and assurance requirements
ESG is not a passing trend and focusing on ESG is imperative for our clients.
Industry examples and business impacts
- Manufacturer required to report on scope 3 emissions for SEC company up supply chain
- Life sciences company to win new market share after reporting out climate-related data
- GM supplier asked to pledge to incorporate ESG standards and commit to achieving carbon neutrality
- Private equity firm requested by investors to assess and manage ESG and climate-related risks
- Not-for-profit organization wins competitive bid as a result of transparently reporting GHG emissions inventory as part of the RFP process
There are steps that middle market companies can take today to protect and enhance their market share and their value as a result of the ESG transparency needs that will be cascaded upon them. It’s just a matter of getting started.
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Client stories
Controlled Thermal Resources builds a foundation to align ESG strategy with business strategy
Controlled Thermal Resource (CTR) proactively aligned sustainable business goals to an ESG strategy, resulting in a strong foundation for the company’s future state ESG disclosures.
Private equity firm packages existing initiatives to build ESG strategy
Private equity firm serving middle-market businesses builds an ESG strategy by evaluating existing initiatives and prioritizing topics relevant to investors.
Manufacturing and kitchen design company begins their ESG journey
Food service business manufacturing and service provider creates an ESG policy and framework to meet critical stakeholder needs and to streamline and enhance RFP submissions.
Not-for-profit leverages GHG emissions reporting to improve OASIS+ RFP scoring
Not-for-profit establishes scope 1 and 2 GHG emissions calculations and self-assessment disclosure to meet OASIS+ contract RFP and proactively prepare for future reporting.
Not-for-profit makes internal reporting changes to align with its external ESG efforts
An organization that historically reported on external sustainability impact, as opposed to internal operations, prioritized advancing its ESG efforts to become a leader in not-for-profit ESG reporting.