Environmental, Social, Governance – and the Unique Role of the Distributor

Ferguson is a company instantly familiar to anyone in the skilled trades as the nation’s largest distributor of plumbing supplies, PVF, waterworks and fire and fabrication products. It is also a major distributor of HVAC equipment and industrial products and services.

In recent years, Ferguson has made ESG—Environmental, Social and Governance—a core component of how it does business. While there have been entire books written on ESG, the basic idea is that there are non-financial risks and opportunities involved in running a business, including the environmental and social impact.

The idea that a company should not just earn a profit, but also act as a positive force in its community has become an important factor in hiring and retention, in customer relations, investor relations and regulatory compliance. Tyler Sewall, Senior Director of Research for BuiltWorlds, writing in their 2024 Sustainable Jobsites Benchmarking Report, said, “ESG-related incentives, either by carrot or by stick, are forcing the industry to adapt to local and universal sustainability targets.”

Just over two years ago, Ferguson named Denise Vaughn its first Vice President for Environmental, Social and Governance. Vaughn has been with Ferguson for 18 years in various communications, public relations, and sustainability roles. She spoke with CONTRACTOR about her role, and the role of ESG in the company’s future.

CONTRACTOR: Can you tell us a little about your role at Ferguson?

Vaughn: My role was created with a singular focus on growing our ESG strategy in tandem with some of the disclosures that we're required to make as a publicly-traded company—really looking at the foundation and the underlying data of our program.

The ESG umbrella is very broad. The way we view it at Ferguson, it is really about leading a responsible business, and this is something that we've been doing since our founding in in 1953.

First, we want to create an environment that's safe and inclusive, one where our associates want to come and grow their careers. We're very, very focused on associate attraction, development, retention and really being a career, not a job.

When we look externally, we're looking at not only how do we minimize our environmental footprint, but how do we help our customers achieve their sustainability goals?

Beyond that, how are we working to be a good corporate citizen? How do we contribute to the communities where we live and work? We do a lot of that through Ferguson Cares, our social impact program. Through that program we focus on three primary areas: promoting the skilled trades, affordable housing, and clean water and sanitation for underserved communities.

CONTRACTOR: Ferguson sits at a very special place in the value chain as a distributor. How does that influence your approach to ESG?

Vaughn: We sit in-between 36,000 suppliers and a million customers and so we're able to influence upstream to work with our supplier partners to make sure that there's a constant influx of innovation. We can help with new product development and then on the downstream side, we're influencing the product decisions of customers across multiple groups—every facet of the built world on a daily basis.

So, where we can introduce more sustainable options from a product or a solution standpoint, we have the opportunity to contribute more broadly. We often refer to our “handprint,” which is our opportunity to have impact and influence the future of the built world.

CONTRACTOR: So training and education becomes a big part of what you’re doing. Can you give some examples?

Vaughn: I will tell you, I live in this world 24/7 and it's overwhelming. I can't imagine my primary focus being running a business and at the same time trying to keep tabs on the evolving regulatory framework at the local level up through the state, through the federal.

We are really looking at what can we do to alleviate some of that burden from our contractor customers and I'm super excited about an ESG or sustainability resource that we have just created for mechanical contractors in partnership with Sloan, Victaulic, Trane, Stanley Black and Decker, Watts Water and their associated subject matter experts. Those experts and Ferguson worked for about nine months and put together resources for mechanical contractors to help them use what they're doing from a sustainability standpoint to be more competitive in the bidding process.

So that's one example. Another example of what we've done across the country is we've hosted decarbonization events for our dual-trade contractors to help them understand the changing regulatory landscape and the implications for their business. We've brought in city officials, we've brought in experts, and had panel discussions and said, hey, look, the world is changing, and this may be disruptive to your business if you're not using it as an opportunity to differentiate.

There are tremendous opportunities from rebates and incentives to all the different funds that are now available to support sustainable work. I think one of the big value adds that Ferguson brings is simplifying complexity, so where we can help contractors understand, for example, how do you map to IRA fundings, how do you help your customer map to tax incentives and so forth. It's tough to be a contractor right now. They live in a world with increasing complexities.

CONTRACTOR: As you know, one of the biggest challenges facing contractors these days is the shortage of skilled labor. Can you tell us a little about that aspect of the Ferguson Cares program?

Vaughn: We're really leaning in on the social side to make sure we're supporting programs like Ace, Mentor and mikeroweWORKS, as well as working locally with school districts—even at the middle school level—to make sure that exposure is there and really elevating the reputation of skilled trades. We're building skills labs in schools across the country in the hope of addressing, alleviating that worker shortage.

Another part of Ferguson Cares is access to clean water and sanitation. There are over 2,000,000 Americans in 2024 that don't have access to proper sanitation and clean drinking water. So, we're working with organizations like Dig Deep and IAPMO to tackle that challenge. At the same time our green stormwater infrastructure team is doing incredible work helping municipalities adapt to changing or erratic weather conditions.

CONTRACTOR: Like you said to begin with, ESG is a very big umbrella.

Vaughn: It is, but it’s all connected. We can't think like we have thought previously if we want to solve the challenges that we face today. We all need to think differently and more creatively, and the opportunities around water are plentiful.