From a buzzword a few years ago to a crucial element in every corporate strategy and business model, ESG (Economic, Social, Governance) is impacting the entire corporate world. While some people are overwhelmed by the ever-increasing number of standards and regulations and their influence on day-to-day business, for others it’s not happening fast enough, given the rapid changes in climate, society and economics around the world.
81 pages of facts and figures, strategy, KPIs and long-term goals across all three pillars – KAEFER’s goals are clearly set out in our ESG & Sustainability Report 2023. Rather than explain what ESG looks like at KAEFER – there’s simply no better source of information than the latest ESG & Sustainability Report – in this K-WERT stories article, we’d like to focus on how ESG considerations influence the B2B (business-to-business) purchasing process and how this shapes our sales activities around the world.
Source: 2022 B2B Buying Guide – The impact of ESG
on the B2B buying process © Fleischman Hillard
Research by Fleischman Hillard “[…] showed that ESG considerations top the list of reasons for companies to seek a new B2B partner. These businesses need suppliers that can help them do more than tick the ESG box.”
Fleischman Hillard concluded its research with the following findings: “Firstly, ESG commitments are not only a core part of brand reputation for B2B companies, but they are also becoming a key purchase decision making factor. ESG goals and considerations should be embedded into every aspect of the organisation.”
It’s one thing to provide reports and figures on a company website for example for clients and partners to review at their request, it’s a wholly different thing to leverage ESG from a commercial perspective. Giovani Ugarelli, Global Sales Coordinator, and Erhard Dubs, Head of Corporate Strategy & ESG at KAEFER discussed this topic and shared their views with us.
Erhard Dubs
Head of Corporate Strategy & ESG
Giovani Ugarelli
Global Sales Coordinator
Understanding ESG at KAEFER
Erhard:
Without a proper understanding of ESG, no one will be able to explain it convincingly to clients, let alone use it as a selling point in tenders or pre-qualifications. While it’s generally accepted that today’s industrial assets will need to change to meet future requirements, the exact why and how is a black box for many. So, let’s boil it down to the core objectives to which KAEFER can contribute:
- to ensure the transition from brown to green energy to decarbonise our societies,
- but also, to comply with recent and future regulations to prevent adverse human rights and other social impacts.
As an industrial services provider with technical expertise and long-lasting experience in the implementation of complex projects, KAEFER can actively support its clients in the transition phase. How do we do this? With our services, it’s quite simple. With insulation, for example, we support the optimisation and modernisation of plants by improving the required energy efficiency, since the majority of global emissions are generated by existing industrial plants.
That’s how we support our clients. At the same time, we take steps to reduce and mitigate our own impact and provide a professional working environment. Whether that means ensuring social dialogue, labour rights, equal treatment, and career development for our global workforce, or engaging with the people in our value chain.
The sales perspective on ESG
Giovani:
We have to look at ESG as two aspects of one coin:
Many clients are intensively involved with ESG themselves and have developed their own ESG strategy. Based on this strategy, they take ESG criteria into account when selecting subcontractors: for some it is still enough to “tick a box”, but many others require meaningful data and concrete cases. One example: We have been asked by some clients to obtain ESG Ecovadis certification for KAEFER as a way of promoting ESG practices, with an additional bonus on our bids if we exceed certain targets and a penaltyif we do not reach acceptable levels. This example shows that ESG KPIs (Key Performance Indicators) are being taken more and more seriously and will soon be a must rather than a ‘nice to have’.
At the same time, many clients are going through the transition from brown-to-green themselves and have to fulfil increasingly strict regulations, e.g. regarding energy efficiency or supply chain sustainability. This is where KAEFER can provide concrete support through its services.
We have to serve both aspects with our sales activities. The range varies from customer to customer and depends on their needs.
Erhard:
As an industrial services provider, you have to be able to afford a serious ESG strategy. This is a bold statement, I know. ESG requires significant resources, not only in terms of manpower to develop the strategy itself, but also in terms of risk management and day-to-day data collection across many countries and stakeholders. The key driver in all of this is our people who are the ones who ultimately put the strategy and the resulting actions into practice.
Clients really appreciate it when suppliers can provide accurate figures and evidence, which is easier for larger and more stable companies to do – especially in a market where price is still a main criterion for awarding contracts. With this data, we can add value to our customers so that they can meet their own targets and are able to take credit for positive aspects (e.g. reducing emissions in their value chain).
We are proud of our ESG efforts: we are doing our homework, implementing the strategy and seeing the ‘first’ results. Although it is still a steep learning curve and we face regular setbacks, we are one of the few in our industry that can meet the most demanding information requirements of our clients.
Getting practical
Giovani:
First and foremost, it is essential to understand the client’s ESG objectives and how they align with their needs. Going one step further – not just completing the tender or pre-qualification document, but actively researching the client’s ESG strategy and focus areas – will make a big difference. Based on the findings, highlight the ESG information that contribute to these client’s needs as a differentiator, tailoring the pitch to the client’s priorities, and backing up claims with data, initiatives, and testimonials of our own.
It’s important that we don’t just “talk the talk”, but that we can provide tangible evidence of KAEFER’s contribution to sustainability and thus build credibility and trust with our clients. Speaking of evidence, did you know that with our current business portfolio, the KAEFER Group has provided services for more than 140 projects related to the energy transition in 2023?
Erhard:
It’s one thing to demonstrate our ESG efforts to clients, partners and other stakeholders, but it’s also the other way around. It is up to us to closely monitor and evaluate developments on the part of our customers, feed them back into the organisation and respond accordingly if needed. One example is the focus on biodiversity. For many of our clients this is one focus of their ESG activities. As we provide our services in established industrial areas, we have a very limited direct impact on this, so we deliberately do not make it an aspect of our ESG strategy.
Another aspect is future developments. We expect a significant shift towards stricter regulations and net-zero targets, for which we and our clients need to prepare. In anticipation of this development, we have joined the Science Based Targets initiative (SBTi) and committed to science-based emissions reduction targets that will set the tone for the years to come.
In essence, ESG is not just a set of criteria to be met but a transformative element in the B2B sales strategy, especially for industrial service providers like us looking to maintain a competitive edge and appeal to ESG conscious clients.
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