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What is ESG?

800 by 600 Blog Sized Image November 2021 NEW (18) (1)ESG stands for environmental, social and governance. An ESG Strategy represents how a company operates regarding environmental issues and social responsibility. Investors often take into account a company's ESG strategy to gauge investment risk and ESG factors and score are used as investment screening tools. 

When referring to lighting, the important category would be E - environmental. Environmental criteria may include a company's energy use, waste, pollution, natural resource conservation, etc. This specific criteria is also used to evaluate environmental risks that a company might face and how the company has managed, will manage, or is managing those risks.

(Jump ahead to read about ESG & LED Lighting)

In short, ESG factors, criteria, and strategies are used to measure how much a company cares about the environment and their effect on it. 

Why is ESG Important?

A company's ESG strategy is important for a variety of reasons: 

ESG Investing and Risk Management

ESG Investing is the practice of incorporating a company's ESG initiatives into an investment decisions. With consumers and investors increasingly more mindful of corporate responsibility initiatives, a company's ESG strategy is now an important screening tool and is often a big factor when stakeholders vet investment opportunities.

In 2020, Yahoo finance even added a sustainability tab that shows the ESG performance of a company and how it compares to competitors. This major change shows how important environmental factors are becoming to investors and consumers. 

A Conscious Brand with Values

Developing an ESG strategy is not only beneficial for potential investors, but it also helps the company brand as a whole, by displaying a socially-conscious business approach and values to consumers.

It's increasingly more popular for consumers to care about a company's carbon footprint. Providing a solid ESG strategy will help consumers (and investors) understand that your company is dedicated to a more sustainable future.  

Decreases Energy Consumption

Developing an ESG strategy will benefit you and your business in many ways. ESG strategies often include comprehensive energy optimization strategies, which often involve building and system retrofits. These onsite retrofits allow businesses to decrease energy consumption and operational costs. A win for your business!

Because of lighting's effect on operational costs, many investment and real estate groups are now standardizing LED lighting and retrofits for their properties and future investments. 

ESG Standards and ESG Score

OIP-3While there are many guidelines for standards, SASB has developed "the best" 77 industry ESG standards to help identify, manage, and report on sustainability topics that currently matter most to investors. 

As a whole, certain investors will screen companies based off their ESG strategies and many take into account the standardized ESG criteria or "scores". As ESG risk score gauges a company’s performance on ESG issues and rates their exposure to and experience with ESG-related risks.

Because an LED retrofit is an extremely environmentally-friendly decision, this type of project has become the standard and one of the first steps in developing and maintaining a solid ESG strategy. 


ESG Strategies and LED Lighting

Many companies are taking steps towards a more socially and environmentally conscious future. And they're starting with LED lighting projects. Why?

Converting a company's interior and exterior lighting to LED lights is a very environmentally-friendly decision for several reasons. By converting to LEDS, a company can:

  • Reduce operational and energy costs 
  • Recycle LED products and materials
  • Reduce their carbon footprint 

LED retrofits have a significant impact on energy consumption and operational and maintenance costs. LEDs are the environmentally-friendly option, which makes sense that companies across the world are incorporating retrofits into their ESG initiatives.

Reduce Your Carbon Footprint with LED Lights and CO2 Reduction

How do LEDs help reduce your carbon footprint?

LEDs use less power compared to traditional lighting. By converting to LEDs, companies can reduce their overall kWh consumption, which directly reduces overall CO2 emissions.

Co2 Reduction Examples:

Hotel :

An LED conversion for a hotel could save up to 292,694 kWh/Year, resulting in the reduction of 400,040lbs of CO2. 

Convenience Store:

An LED conversion for a convenience store can save up to 46,583 kWh/Year, resulting in the reduction of 63,667 lbs of CO2. 

Grocery Store:

An LED conversion for a mid-size grocery store can save up to 258,137 kWh/Year, resulting in the reduction of 352,809 lbs of CO2. 

Hospital & Healthcare:

An LED conversion for a hospital can help save up to 1,077,809 kWh/Year, resulting in the reduction of 1,473,097 lbs of CO2. 

Industrial & Manufacturing:

An LED conversion for a mid-size manufacturers group factory could save up to 302,359 KwH/Year, resulting in the reduction of 413,250 lbs of CO2.

Office Building

An LED conversion for a mid-size office building could save up to 377,170 kWh/Year, resulting in the reduction of 515,498 lbs of CO2. 

 

Lighting Comparison LED vs Traditional Lighting

Below, you'll find a few examples exploring how companies from various industries have incorporated LED lighting into their ESG strategies:

ESG Examples

As you read below, you'll notice the range of industries that include LED lighting in their ESG strategies. From large healthcare REITs to smaller private companies, LED retrofits are a common step (and often one of the first steps) companies take towards a more sustainable future and brand:

Company: Physicians Realty Trust

(Healthcare REIT)

In 2020, Physicians Realty Trust (a healthcare REIT) completed interior LED retrofits on over 3.1M square feet of property (hospitals) to enhance their ESG programming. The total retrofit cost was $1.1M, with an average payback term of 4.1 years. The initiative also created an estimated $2.3M in utility savings over the next ten years and 3.1M kWh in annual savings.

Benefits of this widespread retrofit included: Better energy efficiency, utility savings, and a longer functional life. The LED lights also provided an ideal setting for patients in their hospital rooms and furthermore, the company could recycle LEDs, unlike their previous traditional light sources. 

Company: WPT

(Industrial REIT)

WPT, an industrial REIT, included a full LED retrofit in their 2020 ESG Strategy. They completed an LED retrofit on 1.5 million square foot building in Georgia to show their continued commitment to sustainability. Their comprehensive lighting upgrade not only improved occupant comfort, it resulted in an annualized energy savings of 18.4% since installation.

WPT has also used LED lighting for 100% of projects since 2018 and 88% of their entire portfolio includes high-efficiency lighting. 

Company: ICON

(A clinical research organization)

In 2019, ICON completed an LED retrofit in their Dublin as part of their ESG initiative, which contributed to their 20% kWh reduction target. 

Company: Starwood Capital

(Private Investment Firm)

Starwood Capital Group replaced all outdoor parking lot lighting with LEDs in all their hotels as part of their ESG strategy. 

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