Large companies are increasingly building capacity in their commercial teams to leverage Environmental, Social and Governance opportunities, rather than annexing ESG to a separate division and a tick-box reporting exercise. This means new opportunities for ESG specialists, who are now evolving to become both capacity-builders and valuable resources for client-facing executives.
Asia had traditionally been seen as a laggard in the ESG world, but that’s changed significantly over the past 12 months, with actions by businesses, market regulators and governments advancing the agenda significantly. What that’s revealed is a yawning gap between businesses that were early and enthusiastic adopters of ESG principles, and those that are still failing to take them seriously. That gap represents risk for those who’ve fallen behind, and opportunity for the early adopters.
Best practice organisations have revolutionised their internal ESG functions to match the rapid pace of regulatory reform. No longer does ESG sit as a cost-centre; it’s now seen by the most advanced businesses as part of a risk management function, with an attached set of opportunities that are critical for the c-suite to understand. In order to drive that engagement with the broader business, ESG leaders are playing a very different role.
Hendrik Rosenthal, Director – Sustainability, CLP Group
"There are two groups of companies, ones that are doing ESG reporting from a risk management perspective and who understand the value, and the others who are doing ESG reporting as a tick-box exercise. There is still quite a bit of learning to be done about the materiality aspect of what’s really important for a company to not just report on but on what to actually manage."
Andrews Partnership recently hosted an Asia-wide call to allow leading practitioners in the space to share best practice. One of the most compelling changes to ESG approaches that participants shared was the level of responsibility they’re placing on frontline staff to incorporate ESG in conversations with clients.
Our recent panelists - Melissa Moi, Head of Environment, Social, Governance at Bank of America, and Hendrik Rosenthal, Director Group Sustainability at CLP - have significantly evolved their structures to embed ESG in their broader businesses. At CLP, Hong Kong’s power business, ESG has direct access to the c-suite, reporting into a sustainability executive committee that includes the CFO and Chief Administrative Officer. Bank of America has worked hard to drive the understanding of ESG into client-facing roles, ensuring that its staff can understand and explain to clients the ESG risk and opportunities across the different sectors and countries that they cover.
Whether it’s working with c-level executives, or embedding ESG across the business, the ESG function itself plays two important roles: the first is to equip non-specialists with the ability to grasp the immediate and long-term financial implications of ESG shifts to the business and their own parts of it; and the second is to act as a specialist resource for client-facing teams when they come across issues they can’t resolve themselves. What leading businesses are aiming to do is to ensure staff have a basic level of understanding, and to provide additional support as needed.
Melissa Moi, Head of APAC Environment, Social, Governance, Bank of America
"Authentic integration really comes from a cultural shift that starts from the top and actually is also from the bottom up, it’s a very conscious move to ensure that everybody understands – this is not the responsibility of your ESG Head or Sustainability person, this is the responsibility of every employee in an organization to know and understand the impact of these factors on our work and our own life."
As Asia’s leading executive search firm specialising in leadership roles in this space, our question is an obvious one: what does this shift mean for executives working in ESG? If you’re territorial, you might be moving to protect your own turf, and budget.
If you have a longer-term perspective, you might be looking not so much at the risks as the opportunities. Even as businesses move to inculcate ESG principles and understanding in client-facing roles, the specialist knowledge of ESG professionals remains core to their value. What will take them to the next level, however, is the ability to build collaborative networks in their organisations to harness the talent that sits outside the ESG function itself. The structural changes we’re seeing in the most advanced businesses will help build those networks, but it also calls for a re-evaluation of the ESG practitioner skillset. More businesses are now emphasising the importance of collaboration and influence than ever before. In searching for the best ESG professionals, we’re looking for those individuals who can work in complex environments; who can achieve impact through others; and who can derive satisfaction from others’ success.
What this means for ESG leaders and their skillset:
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