What is ESG?
Employees in corporations and large companies have probably already heard the abbreviation ESG (Enviromental, Social and Governance) referring to environmental, social and corporate business. This business involves planning and implementing activities and analyzing and reporting on how a company deals with climate change, how it treats employees, its customers and suppliers, and what the corporate culture and management of that company is in general.
ESG factors are those factors that make a company sustainable through its social, environmental and good governance obligations, without neglecting financial aspects. They are used to assess the impact of a company or entity in terms of sustainability and corporate responsibility, and are used by investors, analysts and other interested parties to assess the company's environmental, social and governance impact.
ESG reporting obligations from 1 January 2024 apply only to the largest business entities. From 1 January 2025 year obliged entities become all large companies, and from 1 January 2026 This obligation shall be extended to medium-sized and small undertakings (with the exception of micro-undertakings). You can read more details at the following link.
How do energy communities help companies achieve ESG goals?
As companies around the world struggle with increasing pressure to meet their environmental, social and governance (ESG) goals, an innovative solution emerges from local communities. Citizen Energy Communities (ECECs) have proven to be powerful tools to achieve sustainability objectives while creating lasting benefits for all actors. Let's go in order...
What are Energy Communities?
the Energy Community at its core is a new model of cooperation between businesses, citizens and public authorities. These partnerships focus on local production and sharing of renewable energy, creating a more sustainable and resilient energy system. Members are working together to manage energy consumption, store excess energy and even support charging infrastructure for electric vehicles, all while promoting greater energy efficiency.
ESG connection
The beauty of energy communities lies in their natural compatibility with the ESG Principles. From an environmental perspective, these communities significantly reduce their carbon footprint by switching to renewable energy sources and reducing dependence on fossil fuels. The social impact is equally impressive as communities benefit from lower energy costs and new employment opportunities in the renewable energy sector. The governance structure promotes transparency and democratic decision-making, ensuring that all members have a voice towards the community.
Success stories across Europe
The effectiveness of this approach is already visible across Europe. It is in Denmark Karise Permatopia Create an inspiring example of sustainability with its self-sufficient eco-village. Ninety homes share renewable energy systems, including wind turbines and geothermal heating, demonstrating how communities can thrive while minimizing environmental impacts.
Finnish Larsmo Vindkraft demonstrates how private citizens can successfully develop and manage community wind projects. This initiative not only reduces local carbon emissions, but also generates economic benefits for its members. Meanwhile, in Germany, the city of Dindgen is a pioneer of innovative public-private partnership, using public rooftop spaces to produce solar energy that benefits both municipal facilities and community members.
Timeframe of implementation
For companies thinking about this path, the establishment of an energy community is a structured process that usually lasts about a year. The journey begins with the establishment of an association, which usually lasts one to three months. This is followed by obtaining the necessary permits for energy activity, a process that can be extended to seven months. The final phase involves setting up operational systems and mechanisms for energy sharing, which takes approximately six months.
View in advance
How to request ESG reporting becoming mandatory for an increasing number of companies between 2024 and 2028, energy communities offer a practical and effective pathway to achieving sustainability goals. In addition to mere compliance, these communities build stronger relationships between companies, their employees and the local population. They represent an advanced solution that combines environmental responsibility with concrete economic benefits.
For companies that want to improve their ESG performance with a significant impact on their communities, energy communities offer a compelling opportunity. By participating in these communities or starting a business, companies can contribute to a more sustainable future while delivering tangible benefits for all stakeholders involved.
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