ESG integration into business functions key to inclusivity, cost-effective runs

ESG integration into business functions key to inclusivity, cost-effective runs

(L-R) DealStreetAsia Correspondent Tabita Diela; East Ventures Partner Avina Sugiarto; Group Head of Sustainability GoTo Tanah Sullivan; Aruna Co-founder and Chief Sustainability Officer Utari Octavianty.

Applying environmental, social, and corporate governance (ESG) principles can be a solution to be more cost-effective, according to investors and founders, who have seen it transform into an ingrained part of running a business.

The notion is the opposite of the popular belief that ESG has to be an added cost and burden to the company, GoTo Group Head of Sustainability Tanah Sullivan said during a panel discussion at the Indonesia PE-VC Summit last week.

“Our approach to ESG overall is that we are making operational shifts, we are finding ways to be more cost-effective through ESG, we are finding ways to be more efficient, more impactful, more measured, and strategic about positive impact,” Sullivan said, “Everything we did from an ESG standpoint either reduces or replaces operational expense for the company.”

Since last year, GoTo’s Tokopedia fulfilment centres have been selling their waste materials to packaging manufacturers. The company also supported the manufacturer by walking them through the FSC certification and allowed them to sell back the recycled boxes to the company, which resulted in cost and operational reduction.

Sullivan was joined in the discussion by East Ventures Partner Avina Sugiarto and Aruna co-founder and chief sustainability officer Utari Octavianty.

East Ventures has seen ESG as an integrated part of its business function and operations including the startups it invested in, said Avina Sugiarto. While it may not guarantee investor interest, applying ESG principles has to be combined with good fundamentals as well, Sugiarto said.

“I think, realistically, just implementing ESG cannot attract investments, you need to have good fundamental business operations and passion,” Sugiarto said.

Even if applying the ESG principle adds costs to a company, it can always shift its burden to willing customers and also adapt its business process to be able to pay for the cost itself, said Aruna’s Octavianty.

“In our case, producing zero waste means we’re not just producing the product and forgetting about the waste. At Aruna, we also process it into something valuable. So it will help our business growth in the future,” Octavianty said.

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