As a business owner, you want your business to thrive. Growing from a trucking company with one or two trucks to a full fleet is your goal, but to reach it, you must invest wisely. Have you considered the value of ESG factors in your decision-making? You should.
What Are ESG Factors?
What exactly are ESG factors? ESG stands for Environmental, Societal, and Governance. Each of these needs to play a role in any decisions you make because they can impact how people see your company.
Think of a company. What single words or phrases come to mind when you think of that company? Some of them very likely include ESG factors.
Environmental factors include anything affecting the world around us in terms of weather, air quality, water quality, water availability, etc. Environmental factors include global warming, climate change, water scarcity, air pollution, groundwater and soil contamination, and ocean pollution.
For a trucking company, the amount of diesel and gasoline that are used, the wear and tear on roads, and things like rubber tire treads that break off a tire and get left on the side of the road all have an environmental impact. If your company cuts corners on cheap tire repairs and a tire blows and harms other drivers on the road, the negative press can impact your company’s reputation.
You also have to think about pollution, too. If your trucks are leaking fluids as you drive, it’s impacting the environment. Suppose you have a truck hauling a chemical and the truck brakes failed and the truck ends up off the road. The chemicals spill into a stream creating a major problem with pollution. You face fines and potential lawsuits that could destroy your company’s revenues and reputation.
How does your company manage waste products? If you have an on-site garage that repairs and maintains your trucks, do you properly recycle used oil? It might seem unimaginable to you that someone would illegally dump oil, but a truck driver was caught dumping oil from his truck into a river in May. In another case, a shipping company was fined $1.65 million for dumping oil near the Golden Gate Bridge. It does happen. Make sure your drivers do their job properly.
Societal factors cover violations of human rights and that includes employment rights. Companies need to focus on strong, positive labor practices. If you don’t, you risk being charged with violations of employment and discrimination laws, which can create a black mark against your company.
You also have to look at how you respond on social media. Investors are paying attention to social media marketing campaigns. If you spend a lot of time liking posts that are anti a specific ethnicity, gender, or age group, you are making your trucking firm look bad.
For example, if you make it a habit to only hire male drivers and ignore applications from female drivers, you risk losing the support of investors. A diverse, inclusive workplace is more appealing to drivers, and that makes investors look at you in a favorable light.
Consider your social responsibilities as a company owner. You have to remain unbiased with your hiring and employment practices. You need to be socially responsible online and in real life. If you just can’t do that, you have to be ready to lose financial support from investors.
Investors look for a company’s government factors, specifically accountability and transparency. If you’re hiding your company’s financial statements from investors, they won’t want to work with you. They’ll wonder what you’re trying to hide and why.
It’s common for a company that has made poor choices to try to hide them from investors. It’s better to be open and honest about the mistakes you’ve made. Talk about what happened and how you plan to ensure it doesn’t happen again. Risk management is important. Companies with strong risk management plans are less likely to end up losing money or filing bankruptcy. You’ll want to have a business plan in place that considers risk prevention and other ESG factors.
Suppose you keep paying your bills late because you have a broker or shipper who pays you late. You’re not managing that risk. You need a system that ensures you’re paid on time so that you can pay your electricity company, bank, phone providers, etc. on time. If you don’t, you’ll keep losing potential revenue to late fees. Worse, you might have a bank or provider that drops you as too high a risk to work with.
How Do You Use ESG Factors for Wise Investments?
That’s what ESG factors are. How do you use them to make wise investments? Start by assessing your current business model. What do you believe is going well and where is there room for improvement? Focus your investment decision-making on those areas.
If you have older trucks that use a lot more gasoline or diesel than newer trucks, it’s a good time to look at upgrading your trucks to newer models. If you can, consider using tax incentives on EVs to at least changeover some of your company cars or smaller delivery vans to EV models. EV rigs are new to the market and require special ordering, but if you have the funds available, you could look into them.
Does your company struggle with diversity? It’s a good time to look at training programs that help both you and your drivers become more inclusive. You already need to have sexual harassment and discrimination training, so consider tacking on inclusivity training as part of that. It doesn’t have to be a dull lecture. Make it a fun day of food, honest conversations, and enlightening speakers.
You might struggle with late-paying clients and lack a risk management plan. Create one. Turn to freight factoring to ensure you get paid on time. Freight factoring is a service where Saint John Capital pays you the amount you’re owed as quickly as that same day, minus the company’s small processing fee. They take over collecting the money due from your client.
Freight factoring works like this.
- Your driver picks up or drops off a load.
- You receive the signed bill of lading and forward that to Saint John Capital.
- We process it and submit it for payment.
- If you sent your BOL before the noon EST deadline and have a fuel card, you’ll get the money that’s owed the same day. Otherwise, it can take a couple of business days to reach your bank, but it’s better than waiting weeks or months.
Saint John Capital has other services you can pair with freight factoring. Get free business credit checks and use those to take loads from new brokers or shippers. With the load-finding app, you’ll have millions of loads waiting for a trucking company to claim them.
Freight factoring is a great way to get paid before you usually do. Have the money you need to invest in your company, and ease the stress of having to keep calling and asking your clients to pay what’s owed. It’s less stress, a steady flow of money, and better business management. Talk to Saint John Capital to learn more about the different factoring arrangements.