Targeting the Social in ESG

Dr Caroline Burt


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What is ESG?


ESG is often misunderstood or not understood in depth. It is commonly associated with ‘business and the environment’ (as well as being a growing concern in financial investment and the public sector) and is sometimes considered as meaning the same as ‘sustainability’ or ‘net zero’. These terms are sometimes used interchangeably (even though they differ in very important ways). 


But while the three parts of ESG—Environmental, Social, and Governance—are distinct from one another, they are also interdependent.


In simple terms, ESG is a framework that is embedded into an organisation to create a paradigmatic shift towards a stakeholder-centric approach. The fundamental belief it represents is that ‘environment’ is only one pillar of three that determine the overall commitment of an organisation to sustainable outcomes that influence individuals, society and the planet. 


Some examples of the issues that fall under each ESG pillar are given below:


Environmental


• Climate Change

• Decarbonisation

• Water pollution, wastage and scarcity

• Air pollution

• Deforestation


Social


• Mental health at work

• Diversity and Inclusion

• Relation to local communities

• Workplace culture

• Supply chain management


Governance


• Makeup of the board

• Strategy and goals

• Political ties and lobbying

• Choice of companies for tender

• Ethics and values


In this introductory article (the first part of a series) we focus on the ‘Social’ pillar.

The impact of ESG on our perception of 'good' companies

A British Exploring Society expedition in Iceland
The three pillars of ESG: ENVIRONMENT, SOCIAL & GOVERNANCE

Over the last two decades, climate change, environmental concerns and sustainability have become major issues in public and corporate discourse. The imperative is clear: climate change is already upon us and having a major and growing impact on the lives we lead, so we must do something urgently.


Everyone—individuals, government and all organisations, private or public—has an obligation to try to mitigate, and in some cases reverse, developing problems. This is not just a ‘nice to have’ or the right thing for the planet and the people on it, it is fundamental to business success. 


In his 2022 ‘Letter to CEOs’, which has become a keenly anticipated annual event, Larry Fink of Blackrock wrote,


“Most stakeholders—from shareholders, to employees, to customers, to communities, and regulators—now expect companies to play a role in decarbonizing the global economy. Few things will impact capital allocation decisions—and thereby the long-term value of your company—more than how effectively you navigate the global energy transition in the years ahead.” [1]


As head of a global investment management and financial services business, Fink has had one succinct message since 2020: "climate risk is investment risk". But of course, it is not just investment risk. All organisations, of whatever type, must make changes to what they are doing if they are to survive, and if we are to survive. The biggest risks do not therefore come from acting on sustainability, but from a failure to act. When a business chooses to ignore climate and sustainability or fails to adapt, its future is in peril. In this way, the environmental importance of ESG has broken like a wave over all of us. 


The focus on environmental concerns has coincided with, and helped to drive, another fundamental change: in the same way as most would acknowledge that government should be a force for good rather than a necessary evil, so now the expectation is that all organisations act as forces for good and demonstrate how exactly they are doing that. 


In other words, the tectonic plates of cultural expectations have shifted. This is partly generational: data currently available suggests that GenX are much more likely to remain liberal as they age than their forbears, and that they and their successors (Millennials, GenZ, etc.) want business to have a function beyond profit. [2] 


Leaders and boards can find themselves caught in the crossfire of societal and employee expectations, and the need to achieve the fundamental objectives of the organisation, whether that is profit or something else. 


How can they square the circle of succeeding on one without sacrificing the other, while at the same time remaining compliant with the law, regulations, KPIs and the fundamentals of good governance?


The good news is that it is becoming increasingly clear that a well-devised, focussed sustainability strategy and delivery plan can greatly improve profitability and create market advantage compared to competitors. 


In this series of articles, we focus on how businesses can successfully address the key aspects of the ‘S’ in ESG, and how we at Cambridge Management Consulting can help you do this.

How to focus on the S in ESG

The changes to public expectations, and the challenge and opportunity of squaring the circle, extend inevitably to the ‘social’ side of ESG, which has previously received less comprehensive attention than its ‘E’ counterpart. 


Notable examples of the ‘social’ side of ESG in action are the growing emphasis on the importance of diversity hiring and employee wellbeing, as well as on things like social impact. As with the ‘E’ side of ESG and the increase in appointments relating to sustainability, this has led to the creation in many organisations of the role of Head of Diversity, Equity & Inclusion (DE&I), or of ESG more broadly, and to the production of annual DE&I reports. It is a world in which no one wants to be left behind, and in which businesses and other organisations must display their credentials.


It is important to note that things are moving fast, and we have already seen significant progress on the social side of ESG. For example, many organisations have invested heavily in employee wellbeing programmes (including mental health), in mentoring, and in creating supportive platforms for traditionally under-represented groups. Furthermore, many are aware that greater diversity is good for profits. 


This has led to some positive results, with many DE&I reports indicating rising ethnic and gender diversity. For example, organisations are also beginning to think harder about inclusive recruitment and selection processes: does this role really require a university degree; does the test we set disadvantage certain groups of applicants, etc.? 


And, with some notable exceptions, conversations are being had with workforces about the balance between online, hybrid and in-office work. Similarly, in another direction, supply chains are being increasingly scrutinised for things like child labour, exploitation and poor working conditions. 


Organisations are recognising that they need to have a positive impact on society and are taking action to realise that goal.


However, at the same time, there continue to be many significant issues. If we look as an example at the DE&I side of the ‘S’, DE&I officers regularly report feeling peripheral to their organisation and speak of a failure truly to embed DE&I, feeling almost as though the appointment of a DE&I officer tells management that it has discharged its duty. [3] 


At the same time, Scott Keller’s work indicates that only 18% of executives in Fortune 500 companies believe their company gets recruitment of the most talented people right, and a recent survey found that two in five UK businesses do not collect data on the demographic composition of their workforce. [4] In another survey, only just over a half of respondents rated their recruitment and selection processes as ‘effective’ or ‘very effective’ in positively affecting diversity and inclusivity in their company’. [5] 


Moreover, there is limited reporting on things like age and disability/SPLD (often difficult to do within legislative frameworks, but not impossible), and workplace returners (e.g., those who have taken time out of the workplace to fulfil caring/parenting roles). Even in relation to the commonly reported characteristics, data is rarely especially granular, or cross-segmented (e.g., class and gender), which is a further weakness. More female managers and CEOs is progress, but if they come predominantly from one socio-economic background or are mainly white and heterosexual, other cross-cutting aspects of diversity remain unaddressed. 


This is only one aspect of the ‘S’ and demonstrates how quickly things are moving and how much of a challenge organisations face. It may not be long before ‘diversity-washing’ becomes as common a term as ‘greenwashing’ to signal real failures to achieve anything more than superficial change. [6] 


No one wants to have to bring a damaged brand back from the brink, so many boards are beginning to share concerns about their performance in this area, and they are now trying to step up efforts.


How Cambridge MC can help your organisation with DE&I

Leaders and boards trying to grapple with all this would be forgiven for thinking that they are caught in a storm trying to get to an unclear destination with a spinning compass. But this does not need to be the case. At Cambridge Management Consulting we have developed a model that enables both a clear and holistic definition of the ‘S’ in ESG, and an effective and systematic approach to each element. 

As the diagram indicates, at the core is organisational culture:


  • How does the organisation see itself? 
  • What aspects of its culture need overhaul? 
  • What behaviours and attitudes does it embody? 
  • What is prioritised and how is that decided? 
  • How would someone describe the organisation (and brand) from within and outside? 
  • Where does it sit in its context – how does it differ culturally and reputationally from others in the same business area? 
  • Has any change occurred and, if so, what was its impact? 


Redefining organisational culture from the inside out is a difficult, costly and not immediately impactful way for those organisations to make progress on the social side of ESG. What organisations can and must do is embed this into the wider strategy at C-Suite level, before looking at specific ways to implement the strategy.


What the sections in the diagram indicate is that a series of practical, individual and, to some extent compartmentalised, steps that can be taken initially to work towards specific goals. Each can be defined one at a time, keeping a watchful eye on the overall coherence and alignment with strategy. 


It is crucial throughout to pay attention to what the data indicates in terms of strengths and weaknesses in relation to priorities. You cannot improve your diversity recruitment, for example, without understanding where specifically your talent pipeline is blocked and taking targeted action to address that. You can adopt any number of wellbeing schemes to address stress, burnout and retention issues, but if your office culture at a local level is toxic, you are destined to fail. 


You can specify rules for your suppliers to follow, but if there is no formal scrutiny, you cannot be sure that the vision is being realised in practice. That does not mean that you cannot make a very positive and impactful start in these areas—it is key that you do this. In due course, though, it will need to be accompanied by other actions to deliver its maximum benefit. And you need to have a plan for that.


Key Takeaways


  • There are few quick fixes, but taking a stepwise approach is likely to generate real results. 


  • Having a keen sense of the overall picture in relation to the wider organisational strategy is also key to begin to remove the silos that tend to prevail in many businesses. 


  • Such an approach is also much more likely to open the door to greater profitability/value creation, squaring that elusive circle, and allowing you to set the standard and pace for your peers.


  • In the following series of articles, we will discuss each of the major categories and suggest some of the actions that are likely to be effective, based on an ever-growing body of research.

edenseven

If you are struggling with the ‘E’ in ESG, edenseven, Cambridge Management Consulting’s sustainability sister company, works with a range of organisations across differing sectors to support in the rapid decarbonisation of their operations and the services they provide to their customers.


Their proven record of delivery in the space shows that ESG offers a wealth of opportunities for companies to realise.

About the author


Dr Caroline Burt has worked in business, higher education and the public sector, and has many years of experience in recruitment and selection. She is an expert on diversity recruitment. She has transformed admissions at Pembroke College as Director of Admissions and produced the most diverse intake in the College’s history. This has been based on a data-driven approach and a collaborative working model. She also has executive education and experience in mentoring and leadership development and has developed an innovative leadership development programme for undergraduates.


As a non-executive director on two boards, she has been a member of Regulation and ARAC committees and chaired the Remuneration Committee of Qualifications Wales where she made reforms to the CEO succession plan and the Board Chair’s appraisal process. She currently serves on the Independent Welsh Pay Review Body (IWPRB), which is responsible for making recommendations on schoolteachers’ pay and conditions to the Welsh Government. She is an Associate Partner at Cambridge Management Consulting, with expertise on the people, recruitment and diversity side, and on higher education.


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by Duncan Clubb 23 April 2025
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by Mauro Mortali 16 April 2025
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Silhouette of 737 plane in a neon sky
by Tom Burton 9 April 2025
What Problem do Too Many SaaS Providers Have in Common? Many SaaS security providers have a history of treating important safety and security features as something to upsell. This raises the important question of whether a software vendor has a moral responsibility for the secure operation of their solution. In this article, we explore the implications of treating important security and safety features as an upsell, using Boeing as a test case of where this can go wrong. The Case of Boeing and the Aviation Industry The case against Boeing is emblematic of a more systemic issue across the aviation industry, and many other industries. The public became aware of this issue under tragic circumstances when the Lion Air and Ethiopian Air Boeing 737 Max airliners crashed in 2018 and 2019 respectively. According to the widely quoted New York Times article , the crash could have been avoided if the pilots had access to two safety features that were sold by Boeing as optional extras. According to the incident reports, at the root of the incident were the angle-of-attack sensors. These mechanical sensors operate in a similar fashion to a weathervane to measure whether the aircraft’s nose is pointing above or below the direction of airflow. Being mechanical, they may be prone to malfunction, perhaps jamming after having been installed incorrectly — as was believed to be the case for the Lion Air aircraft . The system that led to the aircraft’s demise, which identifies the risk of the aircraft stalling, only listened to one of the sensors. A difference in the signal being sent by the two sensors was not recognised by the anti-stall system; and the instruments that would have alerted the pilots to the conflicting signals were upsell items. This wasn’t a fancy, nice-to-have bell or whistle that makes the flight more comfortable, efficient, or profitable. It is an underlying safety feature of the aircraft. If there was no safety requirement for the redundancy of two sensors, it is difficult to see why there would ever be more than one. Boeing has now addressed the issue, and the anti-stall system listens to both sensors, responding safely in the event of conflicting signals. It should also be noted that the investigation identified pilot error and deficiencies in the training that contributed to the disasters (and this will be relevant to our points regarding many SaaS product decisions as well). The SaaS Parallels Cloud-delivered Software as a Service (SaaS) has revolutionised the tech industry, and catalysed a phenomenal level of innovation and growth. It has enabled new software capabilities to be brought to market faster than ever before, and facilitated the ability to reach a scale with costs defrayed across multiple customers that would have been unimaginable 30 years ago. However, the benefits of being able to access a service from anywhere, at any time, by anyone also presents significant risks. The ‘anyone’ can be a malicious party operating outside of the reach of law enforcement or extradition. As a result, there are clear commercial responsibilities placed on SaaS providers to secure their infrastructure from attack, and those that do not are unlikely to last long in the marketplace. But just like the aviation industry, there are different flavours of security, and different perceptions of what is considered essential. Taking due care and applying due diligence to ensure that the platform itself is adequately secured from a direct attack is clearly the vendor’s responsibility – but what about those elements of security that relate to risk owned by their customers? One key element of customer risk relates to the security of a user’s password. It is their responsibility to make sure they choose a long and random string drawn from upper case, lower case, numerical, and special characters (if allowed). It is also their responsibility to ensure that they do not ever use the same password for multiple applications or services. But, we know that compromised credentials is a common failure mode. Just because it is the user’s responsibility to mitigate this risk, this doesn’t mean that system developers do not also have some mutual responsibility to make it easier for the user to exercise that responsibility; controls have been developed specifically for that purpose. The most obvious ones are Multi Factor Authentication (MFA, or 2FA), and Single Sign On (SSO). With MFA, we improve the security of the credentials by also verifying that the user is in possession of their trusted device before we trust them at sign in. With SSO, we minimise the number of credentials and accounts to manage by federating with a single corporate account; we can then concentrate our effort to secure that corporate account rather than spreading our resources thinly. Both are relatively easily implemented these days, particularly in the case of SSO where the OAuth protocols are widely offered by Identity Providers. Once implemented, both are essentially free to operate, particularly if MFA uses an Authenticator app rather than SMS text messages. SaaS providers recognise that this security is important, and they will frequently implement MFA and SSO controls into their applications to meet that customer demand. But, too frequently, we see them only offered as part of the more expensive subscription options. This element of security is not enhancing the vendor’s core proposition; it is not making their offering more functional, better looking, or more efficient for their users. It is just making it more secure, and therefore to treat it as an item to upsell comes across as price-gouging rather than the responsible application of good security practice. It is almost as though these vendors have run out of innovative bells and whistles that their clients would value in their core product, so they have had to resort to undermining the security of their cheaper options in order to encourage their customers to pay for their more expensive ones. It is equivalent to a bank only using the CSC code on a card to secure transactions for customers who pay for their premium banking services, because, after all, it is the customer’s responsibility to protect their card details. Conclusion What we have described here is not universal, and probably is not even representative of the majority of SaaS providers. But, when you are reviewing a new service, we urge you to take a closer look at what security your provider is charging extra for. If low cost, high value security controls are being upsold, then you may want to consider what other security good practices are not being considered essential. For more information about our cyber security consulting services and Secure by Design principles in action, please contact Tom Burton, Partner for Cyber Security, using the form below.
by Clive Quantrill 3 April 2025
As the UK's ageing copper landline network becomes increasingly unstable, Cambridge Management Consulting reports that BT is urging Critical National Infrastructure (CNI) providers to expedite their transition from analogue to digital voice. With the Public Switched Telephone Network (PSTN) nearing the end of its life, organisations face significant risks if they delay planning and execution for this essential upgrade. Recent data indicates that 60% of CNI providers in the UK still lack a strategic plan to migrate from the legacy analogue network. This statistic underscores an urgent need for action to safeguard essential public services, such as healthcare, water, energy, emergency services, and government operations. The transition is not merely a technological upgrade; it is a once-in-a-generation programme to future-proof communications and improve service reliability. The PSTN, our communications backbone for over a century, is becoming increasingly prone to faults and difficult to maintain, with recent reports showing a 45% increase in significant resilience incidents. The impact of this transition is wide-reaching, affecting critical systems such as telemetry monitoring sensors, emergency phone lines, telecare alarms in hospitals and care homes, CCTV, intruder and fire alarms and older EPOS machines.  As the below graphic shows, a broad spectrum of devices and services will be affected by the analogue switch off, including ISDN, ASDL and Fibre to the Cabinet (FTTC) broadband services. The majority of organisations are almost certainly in the dark when it comes to common knowledge of all of the devices affected, lacking the internal expertise and records to identify and audit complex, interrelated legacy systems.
Red abstract architecture with a cloud passing through the square arch
by Tom Burton 27 March 2025
Well Intended Guidance Leaves more Questions than Answers The UK Government Digital Services – part of the Department for Science, Innovation and Technology – has recently published guidance for how the public sector should adopt a multi-region approach to cloud technology. At first sight this appears encouraging. Any unnecessary constraints on hosting arrangements (or any other non-functional requirements) reduce the available market of providers, constrain competition, and therefore inevitably reduce value for money. If parts of Government, whether central, regional or local, have felt that everything must be hosted in the UK then it makes sense to produce guidance that clarifies this perception and helps to open their options up. But for guidance to be useful it should guide. It should make it easier for people to take actions that they previously would have discounted. The guidance in this case, which at 1420 words is almost as short as this article, probably leaves the reader with more questions than answers. It may reveal some unknowns, but without increasing certainty. The Guidance in a Nutshell A summary of the guidance is as follows: Look wider than UK: Many cloud solutions may not offer UK hosting, particularly new innovative solutions that haven’t scaled up yet. Irrespective, their staff are likely to be distributed around the world if the service is supported 24/7. There may also be other benefits in looking wider than UK hosting, such as enabling better business continuity and disaster recovery options if the vendor only has one UK site. Get legal advice: Before you even consider a non-UK option you need to seek advice from your own legal advisors and your Data Protection Officer (DPO). Ensure compliance with ICO guidance: Before you even consider a non-UK option you need to check and make sure that any international transfer of personal data will be compliant with the Information Commissioner’s Office (ICO) guidance, and you should get further guidance from your own legal advice and DPO. Do a full review of vendor security: Before you even consider a non-UK option you need to make sure the vendor and solution are compliant with your own security policies. In a nutshell, it says: 'you should consider options outside of the UK but only if you have checked everything is legal and secure'. This seems to be verging on a statement of the obvious; the real difficulty in going offshore is covering all of the legal, regulatory and security compliance aspects. Adequacy is a Moment in Time On point 3, the guidance points out data protection compliance is easier if the country in question is considered by the ICO to be adequate – having equivalent regulations for data protection to the UK. Sound advice. But even this is not that simple. For instance, the USA is not considered adequate unless it is under an extension of the EU-US Data Privacy Framework. This framework is dependent on an Executive Order that the Biden administration put in place, and it is entirely possible that it will be revoked by the current administration. If such an action was taken, or if for any other reason the EU decides that adequacy is no longer met (also not unlikely given Herr Schrems has achieved this twice already and has stated he plans to challenge the DPF), then the vendor will no longer be considered compliant. Consideration is Far Wider than Residency Security is far wider than data residency though. This is where point 4 both states the obvious and understates the complexity. Managing risk in the supply chain is inherently difficult. Cloud providers, and particularly SaaS solutions, aggravate this challenge by an order of magnitude. By their nature they are solutions designed for a broad and varied range of customers. This means they will always involve compromise. If they tried to meet the most demanding requirements, they would price themselves out of the scale marketplace. If they went for the lowest common denominator, they would be unable to meet the requirements of the majority. An individual customer can rarely dictate a specific security requirement for themselves. They are also highly opaque. The vendor presents their service as a black box. The features delivered to the customer are defined, but much of the underlying design and the means the vendor uses to manage it in operation are hidden. This makes assessing the risk far more of a judgement call than when the design and delivery is conducted under your control. Depending on the supplier, and the leverage that the customer has over them, it may be possible to get some information and assurances; but the right questions need to be asked, and the answers need to be interpreted correctly. Third party certifications and audits, such as the ISO27000 series of standards or the SOC1, SOC2 and SOC3 reports, can also provide some additional assurances. But only the customer will be able to decide the extent to which they can mitigate the risk, and the confidence they have in the supplier to manage their own. This is a business decision informed by the specifics and nuances of the risks being considered. Summary It is important to minimise the non-functional requirements and keep an open mind about potential solutions and vendors. This includes looking wider than just the UK when national security requirements are not paramount. But this is not something that can be distilled onto a single sheet of A4 in any meaningful way. Yes, there are legal and regulatory issues that need to be reviewed. And geopolitical risk needs to be factored in, considering how you would respond to future external changes that are outside of the UK’s control. But from experience, the greatest challenge is getting comfortable that the vendor’s organisation and their solution have adequate security – this applies equally whether the solution is hosted in the UK or overseas. The SaaS world is opaque, and balances priorities across a broad and varied customer base. The public sector needs to increase its adoption of cloud and SaaS solutions to remain efficient and relevant, in the same way that the private sector has had to. But the route to responsible adoption is more nuanced, requiring candid conversations with suppliers, and ultimately an informed but subjective judgement by the customer’s leadership. Sources/Links: DSIT Guidance for Multi-region cloud and software-as-a-service ↩︎ ICO Guide to International Transfers ↩︎ Executive Order (E.O.)14086 of October 7, 2022, on Enhancing Safeguards for United States Signals Intelligence Activities ↩︎ Note: This article originally appeared on Tom Burton's personal blog at https://digility.net/insights/
Palace of Westminster at night
by Craig Cheney 25 March 2025
The Digital Communities All-Party Parliamentary Group (APPG) shared the ‘Care to connect: Public Switched Telephone Network (PSTN) Migration’ report with key parliamentarians on Monday at a launch meeting on Parliament Street. This report highlights key recommendations for managing the ongoing Public Switched Telephone Network (PSTN) migration, focusing on protecting vulnerable residents and ensuring effective solutions. Here are the major takeaways for local government and communication providers: Data-Sharing Agreements (DSAs) DSAs between communication providers (CPs), local authorities, and telecare providers are crucial for identifying vulnerable residents during the migration. Challenges include inconsistent responses from local authorities and fragmented approaches across CPs. The APPG recommends all local authorities and housing associations sign DSAs, regardless of progress in digital switchover, to promote uniformity and resident safety. Telecare Devices The sale of analogue telecare devices must end, as these can leave residents unsupported during the transition. The government, in collaboration with the TEC Services Association (TSA), should enforce higher standards (TEC Quality’s Quality Standards Framework) across the telecare industry to achieve robust digital migration practices. Financial support for local councils is critical to replace outdated telecare devices and prevent double costs. Battery Backup Solutions Existing guidance from Ofcom, requiring one-hour resilience for power cuts, is insufficient. The APPG recommends increasing power backup requirements to at least 4 hours in homes and 6 hours for fixed networks. Communication and energy providers must jointly create resilient power solutions, particularly for vulnerable residents reliant on telecare devices. A multi-sector priority service register should integrate communications and energy service protection for those at risk. Sunset of 2G and 3G Networks UK mobile network operators plan to stop supporting 2G and 3G networks by 2033, with some networks already switched off. There are cases where local authorities and residents have purchased telecare devices using 2G/3G SIM cards, as a lower-cost, interim solution — these devices will need to be replaced again, posing double replacement costs for local authorities and additional risks to residents. The government should stop the sale of analogue devices and accelerate efforts to prevent the redeployment of outdated telecare alarms. Summary We welcome these recommendations alongside the December 2023 PSTN Charter, the Telecare National Action Plan and the PSTN Non-voluntary Migration Checklist. The conclusions make it clear that coordination between local and central government, industry regulators (such as Ofcom and Ofgem), and communication providers (CPs), as well as significant investment in digital teams at a local level, are essential goals to ensure a safe and inclusive digital switchover for all vulnerable residents and telecare users. Read the full report here: https://digitalcommunities.inparliament.uk/care-to-connect-public-switch-telephone-network-migration-report About the APPG The Digital Communities APPG is a cross-party group of parliamentarians, with the aim to promote the delivery of digitally equipped places that support and foster a connected, healthy, and productive community. This includes the creation and maintenance of sustainable digital infrastructure, as well as providing residents with equal opportunity to thrive in a digital world. The LGA provides the secretariat to the APPG. Cambridge Management Consulting Our Public Sector and PSTN teams can help local councils and other public bodies by providing strategy, financial planning, procurement, and project management services to ensure that you have a comprehensive transition strategy and accurate financial costing for the PSTN switch-off. We can help you follow the recommendations in this report by completing a full audit, signing DSAs with CPs and most importantly, protecting vulnerable service users. Get in touch with Craig Cheney, Managing Partner and lead for Public & Education, to discuss a range of services which might suit your needs: ccheney@cambridgemc.com (or use the form below). Act now, before time and resources run out.
A hazy smog view across a city skyline
by Simon King 20 March 2025
What Do Your Scope 3 Emissions Have to Do with Inflation? Scope 3 emissions cover everything outside your direct operations —the carbon footprint of your supply chain, purchased goods, logistics, business travel, and more. The higher your Scope 3 emissions, the more energy-intensive your supply chain is. And the more energy-intensive your supply chain, the more vulnerable you are to rising costs. Think of it this way: High Production Costs- If your suppliers are heavily dependent on fossil fuels, their production costs are rising fast Price Volatility- If your supply chain lacks efficiency and resilience, price volatility will hit you harder Locking in High Costs- If you’re not actively engaging with suppliers to reduce emissions, you’re locking in long-term cost increases that could have been avoided Without accurate Scope 3 data and a clear engagement strategy , businesses are leaving themselves open to higher prices, lower margins, and greater financial risk . Why Businesses Struggle with Scope 3 A major challenge is that Procurement and Sustainability teams often operate in silos: Procurement teams focus on cost and supplier relationships but often lack deep sustainability expertise Sustainability teams focus on compliance and decarbonisation but aren’t typically measured on financial performance This disconnect means emissions reduction is rarely treated as a financial opportunity —when in reality, cutting carbon from your supply chain is also one of the most effective ways to reduce exposure to cost inflation. The Businesses That Get This Right Will Lower their Costs Leading organisations are already taking action. They are: Gathering detailed Scope 3 emissions data to map out cost risks in their supply chain Engaging suppliers to drive efficiency, reduce emissions, and lower costs Building resilience by shifting towards lower-carbon, more cost-stable alternatives The result? Lower long-term costs, reduced financial risk, and a competitive edge over those stuck with inefficient supply chains. This is not just about sustainability compliance —it’s about smart financial decision-making. If You’re Not Taking Action, You’re Losing Money Every business will feel the impact of rising supply chain costs—but not every business will be prepared for them. If you don’t have accurate Scope 3 emissions data and an effective engagement strategy, you are: Paying more than you need to for essential goods and services Exposing your business to long-term cost inflation Missing out on opportunities to build a stronger, more resilient supply chain The sooner you act, the better the outcome for your bottom line and the planet. Is your business ready to take control of its costs? Get in touch with Cambridge Management Consulting and edenseven today. About edenseven edenseven is the sustainability-focussed sister-company of Cambridge Management Consulting. We work with businesses across all sectors in multiple regions to deliver robust and deliverable net-zero strategies. The success of any strategy relies on its awareness of how changes in policy and subsidies can create both risks and opportunities for a business. If you are a business trying to enter a new market or evolving in an existing market and would like to learn more about how edenseven can support you, please get in touch with the team at edenseven at info@edenseven.co.uk or use the contact form below. Find out more about edenseven on their website: edenseven.co.uk
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