Repay's Sustainability Report: Refreshing Disclosure

Chances are good investors reading this article will have made a purchase or paid a bill that crossed the payments platforms of Repay Holdings (RPAY:  Nasdaq).  The company provides payments processing solutions, including credit and debit card processing and automated clearing house (ACH) processing.  Additionally, the company provides payments technologies for web-based, mobile, text-to-pay and point of sale channels.  It provides business-to-consumer services such as loan payments process and business-to-business services such as receivables management.

With software-based applications at the core of its service offering, environmental sustainability may not seem like a salient topic for Repay.  However, in early May 2022, its leadership published their second sustainability policy report.  The report was introduced by Repay’s CEO as improved over the maiden effort by more closely aligning it with reporting standards set by the Sustainability Accounting Standards Board.  Standards setting bodies typically encourage more rigorous disclosures.

Admittedly, the report begins with a bit of bragging about Repay’s business accomplishments and the merits of the company as an investment.  It is not until page 6 of the 44-page report that the report finally gets to the topic of sustainability and then governance takes a front seat ahead of environmental sustainability.

Of course, as an electronics payments company, Repay’s product and service offering presents an environmental sustainability solution.  To the credit of Repays’ leadership, their sustainability report makes this point succinctly in a few paragraphs on one page of the report.  Instead, the report moves quickly on to a discussion of how Repay is looking for initiatives to reduce waste and energy consumption across its operations.

It was also refreshing to see that Repay had bothered to quantify the impact of its efforts.  For example, the company has adopted DocuSign to reduce the need for paper and disclosed the environmental impact in the year 2021.  DocuSign provides data on all instances the platform is used, providing Repay with a means to calculate the environmental impact of savings in wood and water by foregoing that amount of paper otherwise needed for printing and mailing signed paper documents.  What is missing from the report is what percentage of Repay’s total document processing has been shifted from paper to a digital format.  Did the accomplishments in 2021 represent all of Repay’s document signing requirements or is there more work to be done?

Repay’s 2021 report provided insight into the complexities of forming environmental sustainability policies.  Commentary on cloud computing provides a good example.  The company apparently uses Amazon Web Services for cloud computing.  Since Amazon is attempting to shift entirely to renewable energy at its server farms by 2025, Repay can piggy back on Amazon’s efforts.  However, since Repay’s growth strategy involves the acquisition and integration of smaller operations, it can be challenged to get acquired operations migrated to Amazon’s platform. 

Of course, Repay provided the usual list of best practices for its offices and employees, such as paper recycling and water coolers to reduce single-use cups and plastic.  Some might consider such practices as largely window dressing when it comes to the most pressing problem of our time, the climate crisis. 

For the naysayers, it should be pointed out that Repay is also actively promoting video and other teleconferencing technologies to reduce both long-distance and daily commuting travel.  This appears to be apart from remote work practices related to the coronavirus pandemic.  It is noteworthy that new employee on-boarding includes a virtual meeting with the chief executive officer, a meeting that never takes place at all in some companies.   

Repay has some work to do to disclose its environmental footprint.  Again, to leadership’s credit, the 2021 included an acknowledgement that data is not available on total energy consumed or water used.  There was at least a promise to find ways to measure and analyze water and energy use, pledges that are often missing in other environmental sustainability reports. 

Despite the fact that Repay’s operations are largely digital, it cannot be considered an energy-light company.  Its operations are resident on powerful computer servers that require large amounts of power to keep running without fail day in and day out.  This 24/7 up time may earn Repay a higher carbon footprint than expected.  Before given Repay high marks for its proactive environmental sustainability policies, it is important to finally see from the company a disclosure of its actual energy and resource use.     

 

 

Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.