Is your organization ready for ESG (Environmental, Social, Governance) reporting?
As the cannabis and hemp industries continue to grow and federal legalization approaches, the SEC, investors, lenders, and rating agencies will expect your business to report on social and environmental activities and risks. Are you ready to give them a report?
Why you should care...
Water + Cannabis
“The U.S. cannabis industry is set to grow at a compound annual growth rate (CAGR) of 21% through 2025, to reach $40+ billion. That figure represents more than 3x the legal market of 2019. During that same period, researchers expect total water use in the legal cannabis market to increase by 86%.” (Source: New Frontier Data: Cannabis and H2O Water Use and Sustainability in Cultivation Report)
Electricity + Cannabis
“Estimated at approximately 40% of operational expenses, the energy required for plant cultivation, temperature control, and product manufacturing makes energy management a vital cost consideration for industry players. As global temperatures and the frequency of severe weather events rise, so will the risks associated with energy stewardship and resilience.” (Source: Regennabis: Summit Strategy ESG in the Cannabis and Hemp)
Carbon Emissions + Cannabis
Researchers have “estimated that the emissions from growing 1 ounce of cannabis indoors is about the same as burning 7 to 16 gallons of gasoline, depending on where in the U.S. it’s grown. In Colorado, for example, the weed industry’s greenhouse gas emissions (2.6 megatons of carbon dioxide) exceed those of the state’s coal mining industry (1.8 megatons of carbon dioxide).
The highest greenhouse gas emissions occur in the Mountain West, Midwest, Alaska and Hawaii, where keeping cultivation facilities at optimal temperature and humidity requires significant usage of electricity and natural gas. The study found the highest carbon emissions were in eastern O’ahu, Hawaii, with the equivalent of 324 pounds of carbon dioxide emitted per ounce of dried weed produced” (Sources: Nature Sustainability - Analysis, Smithsonian Mag)
Social Equity + Cannabis
“In 2017, 81% of marijuana business owners in the U.S. were white, 5.7% were Hispanic, 4.3% were Black and 2.4% were Asian. Cruz, along with several other equity advocates in the cannabis space, says the lack of diversity in the industry is at least partly due to the lasting impact of the war on drugs.
From 1980 to 1997, the number of people behind bars for nonviolent drug offenses increased from 50,000 to over 400,000, according to the Drug Policy Alliance. Today, drug offenses are the leading cause of arrest in the U.S., with more than 1.5 million people arrested for drug law violations in 2019.” (Source: CNBC: Cannabis is Projected to be a $70 Billion market by 2028—yet those hurt most by the war on drugs lack access)
Have you started thinking about this? If not, Backbone can help.
Eventually, you’ll need an ESG plan. However, it all starts with a dialogue. Whenever your company decides to have the ESG dialogue it will be a transformational journey that will result in changes to all aspects of your business. You may discover that the implementation of new ESG-focused strategies and the reporting of progress, impact, and outcomes may evolve your business in inspiring ways. Everyone is affected by these changes. At the end of the day, good business will prevail. And so can you.
Here are some examples of each focus area that can help you and your team start to think about your ESG strategy.
E - Environmental
Scope 1/2/3 carbon emission
S - Social
Product Quality and Safety
Supporting Local Community
Cannabis Social Equity / Cannabis Justice
Diversity Equity and Inclusion (DEI), Employee Engagement
G - Governance
Supply Chain Management
Board / Leadership Demographics
Employee diversity hiring
Decision making model
Not sure where to start?
No problem. Backbone can help. Let's explore what collecting ESG data and generating reports looks like for your organization. Reach out and we will help you find the right ESG strategy for your business.