CHAPTER TWO:

ESG—An Idea Present From the Start

“As we partnered with DNV to obtain reliable third party data on our current ESG efforts, we found that much of what Colonial Group does already falls under this umbrella. We take care of our people and community; that reality has been there from the start. With an official ESG report, we can more clearly connect the dots on our current positive efforts and pinpoint where we can grow moving forward.”

Christian Demere – President & CEO

While this is Colonial Group’s first official ESG report, we are not new to the elements that make up the value and importance of such a report. As we grow, we believe it's important that our ESG efforts are better communicated to our stakeholders. The time has come to take a deep dive into what we are doing well as a company and how we can make steady growth on a path of continuous improvement.

Partnering with DNV: The Initial Project

In 2022, Colonial Group engaged with DNV Business Assurance USA, Inc. (DNV), a trusted independent expert in assurance and risk management, to help us identify and prioritize the company's environmental, social, and governance issues. Our desire was to understand our key strengths and prioritize areas for improvement. Through this partnership, DNV provided a framework to:

  • Integrate ESG formally into Colonial’s organizational culture and corporate philosophy
  • Leverage Colonial’s ESG commitment to strengthen all existing relationships while cultivating new ones
  • Adopt an ESG strategy that reflects Colonial’s core values and supports continuous improvement and innovation across the family of companies

The entire scope of work and project goals were carried out in three phases.

Phase #1: Stakeholder Engagement - In this first phase, we set out to understand which issues held the greatest interest and concern to our internal employees and external stakeholders (peers, competitors, community, and industry).

Phase #2: Materiality Assessment - In the second phase, we developed a draft of our materiality matrix and validation of issues ranking with senior management by drawing on internal stakeholder surveys and findings from stakeholder engagement.

Phase #3: ESG Capacity Assessment - The final phase evaluated our management approach, governance structure, and strategy against priority issues from an ESG lens. The goal was to gain an understanding of strengths and challenges as compared to peers from the benchmarking group in priority topics.

Impact Areas and Issues 

Following an in-depth study of Colonial and Enmarket operations, including interviews with employees and stakeholders, 23 ESG issues were identified and categorized into five impact areas, including strengths and areas of growth: Environment, Product/Service, Social, Employee, Governance & Ethics.

The Evaluation: What We Learned About Our Company 

DNV evaluated our entire company against the following domains:

  1. Management & Performance: Colonial Group’s management and performance on priority ESG issues
  2. Governance: The quality of top-level governance of priority ESG issues
  3. Strategy: Colonial Group’s future strategy and targets
  4. Reporting: Colonial Group’s internal and external disclosures related to the ESG priority issues and related third-party assurance of the management verification of systems and reported performance

DNV considered the risks and opportunities across all business units in relation to community engagement for each of the issues included in the assessment. This analysis included impact on operations, with regard to our employees, suppliers, and communities.

Like any reliable assessment, the DNV team assigned quantitative scores to provide us with both an overall view and the capacity to address the priority issues included within the assessment. Each issue was evaluated against a rating scale of 0-100% with 100% representing an ideal standard of best practice.

Across all 23 issues assessed, Colonial scored between 33% and 78%. According to the assessment, this range indicates we have an established management approach and governance structure in place for select ESG issues. We can leverage these strengths to further improve our ESG goals while working to address areas of opportunity.

  • Total average score: 60%
  • Issue with the highest score: Service Safety & Quality (CGI - 78% and ENK - 74%)
  • Domain with highest score: Governance (73%)

In comparison to similar companies, Colonial Group sits in the middle of the pack. A large contributor to this outcome is that other companies (several with offshore operations) have been tracking their ESG efforts for years with more detailed reporting in place, an effort we are now proactively investing in to improve.

Employee Survey 

When our employees were asked to state and rank the most relevant ESG issues, the following five rose to the top.

  • Employee Health & Safety 
  • Product/Service Safety & Quality 
  • Employee Wellness, Recruitment, Retention
  • Working Conditions 
  • Pay Equity 

From these top five issues, Colonial Group and Enmarket received the highest scores for Service Safety & Quality. Since the very beginning, the quality of our service has been critical to our business and has been a top priority; however, the question remains, "Where exactly are we excelling and where do we need to grow?"

Where Colonial Group Excels

Strength doesn't mean we have arrived. On the contrary, we see areas of strength as opportunities we need to invest in full steam ahead! Based on DNV’s assessment, our leaders and employees are excelling in the following:

Governance Structures & Executive Buy-in

Having a unified team makes all the difference. One of our key strengths is the buy-in and clear accountability we have from both our Board of Directors and executive leaders down to our day-to-day managers across each of our business units. Clear reporting lines exist for Product/Service Safety & Quality, and Employee Well-Being, and updates are provided to executive leadership and business area leaders multiple times a year. We remain committed to our core values of service and integrity which drive our best practices and guide decision making. 

Many of our employees' survey responses showed that our core values are among the reasons they are attracted to and stay with the company. Colonial Group’s family mentality garners organizational buy-in on initiatives that are viewed to be in line with the company’s core values. In many cases, these initiatives' returns are seen over the very long term (e.g. energy savings, workplace safety initiatives, etc.), and our long-term view stands in contrast to forces impacting publicly traded companies, which are often beholden to quarterly earnings release expectations.

Quality & Safety

People come first, plain and simple. Colonial Group has dedicated significant resources and capacity towards responding to customer concerns and strengthening performance related to service quality and safety. As a result, the DNV assessment indicates we are effectively managing risks and tracking positively with KPIs. We closely monitor customer feedback, concerns, and complaints and implement a corrective action plan as soon as issues are identified by either the business or the customer. Our executive leaders are regularly involved with management reviews, setting a tone from the top that quality and safety are of utmost importance.

Stakeholder Engagement 

Colonial Group is an active participant in a number of multi-stakeholder industry initiatives where the company engages in opportunities for cross-learning and collaboration with esteemed peers. In addition, feedback from employee surveys and stakeholder interviews shows that our company demonstrates a deep commitment to acting on its core values and has earned a reputation as a critical community partner.

Employee Well-Being

As a family company, employee well-being is at the heart of Colonial Group. Within the last year, we’ve made significant investments toward increasing our capacity to respond to employee needs and concerns (such as expanding our HR team) and broader employment trends for the sector(s) and region. The organizational structure established within the last 12 months supports a cohesive approach allowing each business area to tailor its programs (e.g. recruitment, employee engagement) to its unique operating circumstance. 

Where Colonial Group Can Grow

As expected, and as with any company, we have opportunities for improvement. While we have documented our ESG efforts, communication of this has been limited both internally and externally. Ultimately, we desire to have clearer communication so that our efforts, as in the case of GHG reduction initiatives, are tracked and evident. This will allow our ESG KPIs to be more efficiently tracked, year over year. 

Additionally, there is an opportunity to develop a company-wide policy and specific goals around employee well-being. As our team continues to grow, so do our HR and EHS efforts to ensure our people are heard, taken care of, and seen.

Energy Consumption, Greenhouse Gas & Climate Change

With an issue score of 33%, this uncovers our biggest opportunity for growth and is reflective of a relatively recent priority for our company. Colonial is increasingly identifying areas where we can better our communities and environment through stronger initiatives to reduce energy consumption and our carbon footprint.

Global Sustainability Efforts 

While conscious of our areas for improvement, Colonial is pleased to share that we already have many initiatives in progress which align with the United Nations’ 17 Global Goals for Sustainable Development.

At the heart of the 2030 Agenda for Sustainable Development are 17 Sustainable Development Goals (SDGs) which serve as an urgent call to action for developed and developing countries to work together in global partnership. The goals recognize that clean water and sanitation must go hand-in-hand with strategies that improve infrastructure, provide affordable energy, and spur economic growth – all while tackling climate change and working to preserve our oceans and forests.

How Colonial Group Is Supporting Our Environment

Colonial is working to reduce our carbon footprint and take action to support the United Nations' Global Goals. The following are just a few of the sustainability efforts we accomplished in 2023:

Renewable Fuel Product Handling

Colonial Towing is in the process of constructing a barge within our marine fueling fleet capable of handling renewable fuel products (biodiesel, renewable diesel, methanol, and ammonia) intended for marine use which lowers emissions in ocean-going vessels.

Energy Savings

Colonial Terminals is in the process of converting existing exterior light fixtures and bulbs from 400-watt high pressure sodium to 50–60-watt LED bulbs, resulting in energy savings of approximately 70% and an increased life cycle of three additional years.

Electric Vehicle Charging

Enmarket installed EV charging stations at five locations with three more being installed soon.

Reusable & Recyclable Packaging

All stores now use a multitude of recyclable packaging. Additionally, Enmarket now incentivizes customers to purchase and use reusable mugs as opposed to disposable cups by strategically offering lower prices on reusable fountain mug refills. These are also provided to all employees to use at work when they onboard with us.

Clean Water & Carbon Reduction

Among the 17 new customers Aqua Smart acquired in FY2023, average chemical use was reduced by 15-50%. With the help of SeaQuest, Highland Sewer and Water Authority in Pennsylvania reduced their carbon footprint by 40% and phosphorus use by 25%. SeaQuest additionally enabled the Southwestern Pennsylvania Water Authority to stop their use of ammonia and reduce pH adjustment while maintaining disinfection performance.

Biodiesels & Efficient Fuel Delivery

Colonial Oil is embarking on a journey to sustainability, moving towards lower carbon intensity one step at a time. This team is actively engaged with the Georgia Ports Authority to introduce fuel supply and operations standards that will support the port's ambition to become “green” through the adoption of biofuels and efficient methods of fuel delivery. Colonial Oil is also partnering with Chevron Renewable Energy Group and other producers of biodiesel and renewable diesel to introduce higher blends of biodiesel into our channels and develop a methodology for quantifying carbon reduction benefits for customers.

Ecovadis Sustainability Rating

EcoVadis provides the leading solution for monitoring sustainability in global supply chains. Their methodology framework assesses companies' policies and actions, and their team of experts analyzes and crosschecks companies’ data to create reliable ratings.

For the fourth consecutive year, Colonial Chemical Solutions was awarded a bronze medal from EcoVadis in recognition of sustainability achievement, positioning it in the top 35% of all assessed companies.

Crown Carbon Reduction Technologies

In November of 2022, Colonial acquired Crown Carbon Reduction Technologies. This Wyoming company provides comprehensive solutions that improve the efficiency and sustainability of the mining and energy-producing industries. CCRT exclusively markets a fuel catalyst that is being blended into traditional fuels for mining and oil field customers that has achieved a 6-8% reduction in fuel used and has reduced the overall carbon footprint.  Below is a table that shows the amount of CO2 we've prevented with our fuel catalyst products:

CCRT’s dust control products ensure safe underground working conditions and compliance with regulatory restrictions and mandates. Crown is the exclusive provider of a three-part environmentally safe railcar topper product that reduces combustible dust accumulation and provides residual control of harmful fugitive dust emissions. Additionally, CCRT’s portfolio of process chemicals:

  • Reduces water consumption at mines 
  • Limits carry back of product frozen to railcars and reduces thermal energy waste from thawing
  • Improves binding to reduce lost tons from particles lost in transit
  • Reduces thermal runways and improves BTU preservation in stockpiles

Decreasing Our Carbon Footprint

Another essential component of this report is to gain a clearer understanding of our current greenhouse gas (GHG) emissions. Knowing our current standings will allow us to make tangible improvement goals for the future. 

Colonial partnered with Sphera, a global company that provides safety and sustainability data performance, to calculate a baseline GHG inventory for Scope 1 and 2 emissions for the fiscal year ending September 30, 2023.  This methodology aligns with the Greenhouse Gas Protocol: A Corporate Account and Reporting Standard and Operational Control organizational boundaries. We intend to use these insights, along with ongoing future calculations, to quantify the effectiveness of our current initiatives to improve the environmental impact of our operations. 

To better monitor and track the success of our sustainability efforts, we normalized the reporting of our emissions to match the size of our operations. This adjustment will allow for better monitoring of our progress, enabling us to report our total emissions as tCO2e per unit of activity. 

 
A graphic reviewing GHG statistics.
The majority of Colonial's operations fall into the distribution and materials handling industries. With that fact in mind, we converted our activity to metric tons of product sold or handled. For example, we converted refined products from gallons, chemical products from pounds, and liquid products handled throughput from barrels. Dry bulk materials handling throughput is measured in metric tons, so no conversion was necessary in this area.

In addition to understanding our own current greenhouse gas (GHG) emissions, we are facilitating the sustainability efforts of our customers by offering biodiesel.

A graphic showing GHG emission reduction impact.
Definition of 23 ESG Issues

Impact Area 

Issue 

Definition 

Employee

Employee Health & SafetyPrevention of work related employee injuries and illnesses 
EmployeeWorking Conditions Prevention of human rights and working condition violations in CGI operations i.e. forced labor, child labor, working hours, etc.
EmployeeEmployee Wellbeing Recruitment and retention (growth and development through training and internal succession planning), programs designed to maintain employee physical and mental wellness, i.e. work-life balance, employee fitness, employee learning 
EmployeeLabor Relations Representation of employees in decision-making dialogue 
EmployeePay Equity Equal pay for work of equal value
EmployeeDiversity, Equity & InclusionSupporting gender, racial and ethnic diversity of employees at all levels and within functions; and removal of barriers that prevent employees from contributing to their full potential 
EnvironmentClimate Change & GHG EmissionsManagement, including mitigation and adaptation, to climate change impacts within CGI's operations 
EnvironmentTransportation & Logistics Fleet efficiency, use of alternative fuels 
EnvironmentEnergyEnergy CGI consumes in operations, and whether it comes from renewable or non-renewable sources, use & efficiency
Environment
WaterWater used in CGI operations or in owned and leased buildings; amount withdrawn in water stressed areas, impact on water quality
Environment
Biodiversity & Habitat ProtectionPreventing harm to local ecosystems, such as indigenous vegetation, air quality  
Environment
WasteGenerated from CGI's offices and operations that end up in landfills 
Governance & Ethics Business ConductPromotion of ethical values and acting professionally, fairly, and with utmost integrity when representing CGI operations (including integrity, anti-bribery and anti-corruption)
Governance & Ethics 
Anit-Harassment & Anti-Discrimination Prohibiting harassment, discrimination, bullying, and/or abusive behavior across all aspects of business  
Governance & Ethics 
IT Security Protection  of stakeholder data 
Governance & Ethics 
Responsible Sourcing Enmarket only: Responsible Sourcing (procurement of sustainably sourced food ingredients, sourcing of products with transparent labeling aligned with industry standards, such as nutritional information and ingredient list, animal welfare)
Governance & Ethics 
Transparency Public disclosure on CGI's taxes, government engagement, lobbying/advocacy efforts, etc.
Product/Service Responsible MarketingEnmarket only: Alignment with industry labeling, e.g. underage sales  
Product/Service
Safety & Quality Management of safety, integrity, and quality in operations, responsible handling of customer products 
Product/Service
InnovationProcess improvements within operations to increase efficiencies and reduce risk 
Product/Service
Packaging Enmarket only: Reducing plastic and packaging waste, increase recyclability of packing 
Social Community Engagement CGI relations and impacts on the community
Social  Human rights and working conditions in supply chainPrevention of human rights and working condition violations (forced labor, child labor, working hours, etc.) in supplier operations 

 

Materiality Findings
Impact Area Material Topic ESG Issue ESG Issue Definition 
EmployeeEmployee Well-Being Employee WellnessMaintain employee physical and mental wellness, i.e. work-life balance, employee fitness, employee learning
EmployeeEmployee Well-BeingEmployee Working Conditions Prevention of human rights and working condition violations in CGI operations i.e. forced labor, child labor, working hours, wages, etc. 
EmployeeEmployee Well-BeingEmployee Health & Safety Prevention/elimination of work related employee injuries and illness  
Employee Employee Well-Being DEI, Pay EquitySupporting gender, racial and ethnic diversity of employees at all levels and within functions; removal of barriers that prevent employees from contributing to their full potential; pay equity 
EmployeeTalent Management Talent Development  Recruitment, retention and development i.e. growth through training and internal succession planning; employee satisfaction
 ProductProduct/Service Safety & QualityProduct/Service Safety & Quality  Management of safety, integrity, and quality in operations, responsible handling of customer products
Governance & Ethics Business Ethics Business Conduct Promotion of ethical values and acting professionally, fairly, and with utmost integrity especially when representing CGI operations (including integrity, anti-bribery and anti-corruption) 
Governance & Ethics CybersecurityDiscrimination IT Security & Data PrivacyProtection of stakeholder data  
EnvironmentClimateClimate ChangeManagement, including mitigation and adaptation, to climate change impacts within CGI's operations 
EnvironmentClimate Energy & GHGEnergy CGI consumes in operations, and whether it comes from renewable or non-renewable sources, use & efficiency
 SocialCommunity EngagementCommunity Engagement CGI relations and impacts on the community