ESG and sustainability are ultimately nonnegotiable in business and investing, and so many are looking to businesses to see this information instead of focusing just on financials. There are many different areas that investors focus on when looking to invest in ESG, and sustainability is a huge factor in this. ITAD plays a crucial role in this area because of its role in disposing of electronic and IT devices properly. With sustainability being a huge focus, it’s important to recognize that IT devices can cause pollution if they are not disposed of properly. We’re going to dive more into how ESG investors view ITAD companies and why recycling of IT devices is crucial for your business.
What is ESG?
First, let’s look into the basics of what ESG is and what areas it covers. If you’re new to ESG investing or just want a better look into what it entails, then here’s a breakdown of the three main areas of ESG:
Environmental Impact: The environmental impact focuses on the role of ITAD in reducing e-waste and minimizing carbon footprint. It also focuses on the certifications that are needed in order to be in compliance with standards.
Social Responsibility: This is the impact on social responsibility, as well as it comes to refurbishment for communities and donation practices, as well as ethical labor practices.
Governance & Risk Management: Secure destruction of IT devices is one of the main roles of ITAD, and it’s important to ensure that there are no possibilities of breaches. Also, it puts in place the practices of audits and documentation needed for those who are looking into the ITAD practices of these businesses.
Why Do ESG Investors Care About ITAD?
ITAD is a way that businesses can ensure they are meeting sustainability standards while disposing of their IT devices in a way that supports environmental, social, and governance needs. Ultimately, investors look to businesses to see how they are treating their devices and in what ways they are contributing to each of these areas. IT asset disposition contributes to each of these areas heavily, ensuring that if they are working with a reputable ITAD, then they are in compliance with these sustainability efforts. Investors aren’t looking just for financial gains with investing in businesses, but they are looking to make an impact by investing in companies that have prioritized sustainability, with the impact of sustainability being much more prominent in today’s time.
What Do ESG Investors Look for in ITAD Recyclers?
When ESG investors begin looking into ITAD recyclers, there are a few different areas they look at specifically. When weighing their options on who to invest in, they consider different avenues that will make a big impact on sustainability, while being able to use these areas to determine who they want to invest in.
Certifications and Standards
There are different standards that need to be met in the ITAD world in order to be in compliance, but also to keep track of practices for potential audits. Overall, these certifications will help to meet the standards, and having certifications allows the investors to understand where the company is with their compliance, tracking, and overall ITAD focus.
Reporting
Reporting and transparency are huge when it comes to ITAD companies. Investors, compliance regulators, and others are looking to get a detailed idea of what exactly the business is doing when they are doing their IT asset disposal. Reporting allows for an easy-to-track way of seeing every step that the business goes through in order to ensure that the devices are being disposed of in a compliant way.
Circular Economy
Circular economy refers mainly to the refurbishing and redistribution of devices to other businesses or communities. Essentially, this is a full recycling practice where the devices are cleared and refurbished to be usable again for another industry or underserved communities. This type of recycling and reusing contributes heavily to a circular economy, leading to less waste and more usage out of devices that may not serve their original purpose.
Financial Alignment
Although ESG investors don’t rely solely on looking at financials, they do play a role in what areas they look into when finding businesses to invest in. For this, they typically look into the financial ROI of the business as it relates to cost offsets or revenue sharing.
How to Structure Your ITAD Business for ESG Investors
You should start by looking at the different areas that ESG investors typically pay attention to. This means understanding what their top priorities are and ensuring that your ITAD business meets those requirements or aligns with the focus of a typical investor in this market. Let’s break it down:
Certifications: You should achieve and highlight the relevant certifications that your business holds that are relevant to ESG investors. You should also ensure that your reporting is up to date and that you are actively updating it to ensure that ESG investors see how your business operates every step of the way when it comes to ITAD.
ESG Reporting: Having dashboards or systems that show relevant information for interested ESG investors can help lay out the information that they would want to see from your business. For example, the dashboard could showcase emissions avoided, recycling volumes, or refurbishment rates.
Social and Ethical Practices: Showcasing what kind of contributions you’re making to social and ethical issues can help to lean into the social impact of an ESG investor. You can do this by showcasing some of your programs that you have which donate refurbished devices or other ways that you help with a circular economy.
Preparing Your ITAD Business for ESG Investors
ESG investors aren’t focused just on financials like most other investors would be focused on. In fact, they are looking more for transparency, impact, and overall responsibility when it comes to sustainability. These investors look closely at different areas within ITAD businesses that help them determine how big of an impact you’re making and if they want to invest in your business over another. With that being said, it’s important to ensure that your business meets all of the typical ITAD requirements while highlighting the impacts you’re making. This makes it easy for ESG investors to see what you’re doing and make a decision on whether or not your business is the right one for them to invest in. Contact us today to learn more.
