I’m wearing out this theme, I know. But it needs repeating because we’ve gotten so off track in determining the business value of ESG. I’ve written many times before that the majority of US companies position their ESG efforts and value to satisfy the capital markets (in my book, I call this “sprinkling ESG fairy dust on shares”). But that misses the point – the true and lasting value is reflecting ESG results as operational business fundamentals: new markets/products, meeting customer demands, reducing direct costs and risks. Companies that run well are rewarded by capital markets – it really isn’t the other way around.
Earlier this week, The New York Times ran an interesting article about how the gas station/convenience store company Circle K is adapting to the growth of EVs in Oslo, Norway. Initially, the company saw the reduced demand in gasoline as a major business threat as gasoline sales are obviously a huge part of their business. But it took a hard look at its business model and adapted to the inevitable – which in Oslo is already here. The company jumped in.
“Chargers far outnumber gasoline pumps at the service area operated by Circle K, a retail chain that got its start in Texas. During summer weekends, when Oslo residents flee to country cottages, the line to recharge sometimes backs up down the off-ramp.
Marit Bergsland, who works at the store, has had to learn how to help frustrated customers connect to chargers in addition to her regular duties flipping burgers and ringing up purchases of salty licorice, a popular treat.”
This change required a pretty significant shift in the company’s thinking, attitude and – yes – investment. It is proving to be a good bet.
“Circle K, which bought gas stations that had belonged to a Norwegian government-owned oil company, is using the country to learn how to serve electric car owners in the United States and Europe. The chain, now owned by Alimentation Couche-Tard, a company based near Montreal, has more than 9,000 stores in North America.
Guro Stordal, a Circle K executive, has the difficult task of developing charging infrastructure that works with dozens of vehicle brands, each with its own software.
Electric vehicle owners tend to spend more time at Circle K because charging takes longer than filling a gasoline tank. That’s good for food sales. But gasoline remains an important source of revenue.
‘We do see it as an opportunity,’ Hakon Stiksrud, Circle K’s head of global e-mobility, said of electric vehicles. ‘But if we are not capable of grasping those opportunities, it quickly becomes a threat.”
What This Means
This is a perfect example of what I talk about all the time: linking ESG to operating business fundamentals rather than sprinkling ESG fairy dust on your shares for the capital market. It may not be easy to find these connections. You need to understand buyer behavior, trends and key buying criteria and assess where there are opportunities for your company to meet those by making ESG-oriented changes. Given global growth in EVs now and what is predicted for the future, it will be interesting to see how gas station companies like Wawa, Pilot, Buccee’s, Speedway, the myriad of regional chains and franchisees of major oil companies adapt to the market changes. Will they find new business opportunities, or will they miss the boat on business fundamentals and slowly fade into the sunset?
