Almost six in 10 see ESG as critical to their firms

Almost six in 10 see ESG as critical to their firms – Aon | Insurance Business New Zealand

Insurance News

Almost six in 10 see ESG as critical to their firms – Aon

Only 29% have ESG-related goals and KPIs for their C-suite

Insurance News

By
Kenneth Araullo

Results from the latest Aon survey found that only 58% of companies in the Asia Pacific region see environmental, social, and governance (ESG) issues as critical to their firms in terms of long-term success. A lower percentage of 29% also say that they have ESG-related goals and KPIs for their C-suite.

The report, titled 2023 Asia Pacific Corporate Governance and ESG Survey Results, also found that only three in 10 of companies surveyed have a dedicated ESG function. It also listed board and management and financial stakeholders as the main drivers of ESG action in the region, as opposed to regulatory environment, which Aon said is still evolving in most of the surveyed countries.

The other primary drivers of ESG concerns are as follows:

Customers (18% for listed companies, 17% for private companies)
Regulators (18% for listed, 15% for private)
Community at large (11% for listed, 17% for private)
Employees (5% for listed, 8% for private)
Competitors (0% for listed, 1% for private)

Integrating ESG, linking to financial incentives, and green talent

The report also said that board education is key to further integrating ESG for the market. Sixty-one per cent of respondents said that their entire board is involved in decisions concerning ESG. However, 41% of that figure did not have a formal process or training program to educate board members about contemporary ESG topics.

Another key to improving ESG practices is linking it to financial incentives. Aon Asia Pacific Human Capital Solutions advisory partner and corporate governance and ESG lead Boon Chong Na said that incorporating ESG performance criteria into executive compensation plans means that ESG metrics are more likely to align with the company’s strategy.

“It is becoming clear that failing to address and integrate ESG metrics in the future will expose companies to reputational risk, financial impacts and regulatory consequences as they navigate new forms of volatility. However, while improving ESG metrics, companies need to manage both the financial and non-financial aspects, as shareholders expect them to do well while also doing the right thing,” he said.

Aon also found that a third of surveyed companies planned to introduce or expand current ESG roles, with 76% saying that these positions are hired at the mid-professional level. This “green talent,” Na said, is essential to keeping firms sustainable with a more reliable workforce.

“Companies will need to embark on job redesign and upskilling initiatives and invest in their talent to meet this growing demand, either through external university programs, micro-credentials, sustainability certifications or internally managed employee training. A comprehensive talent strategy is essential to keep businesses competitive, and a robust workforce reskilling program can help build a more resilient workforce, enhancing the potential of existing employees even if external talent pools are shrinking,” he said.

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