ESG strategy a must for today's businesses, experts state at virtual forum
Environment, Social and Governance (ESG) strategy is starting to play an important role in how businesses are run and in people's lives, CEOs and experts said during the virtual forum "Redefining the future of ESG in Thailand”.
The virtual forum was organised by The Nation and Asia News Network on Thursday.
ESG key to improve citizens' quality of life
ESG would be the key strategy to improve the life of people in the city, Bangkok Governor Chadchart Sittipunt said, while speaking on "The New Chapter of BMA: Make the Capital City better by using the ESG strategy".
He explained that the Bangkok Metropolitan Administration (BMA) is focusing on meeting the needs of all Bangkokians to tackle four challenges to the city’s development: high population density, specialised workforce, inequalities, physically separated and vulnerable citizens.
He said the BMA is implementing ESG strategy as a part of management, health, environment, creativity and education policies.
On the environment, he said the BMA has started with the green concept, such as growing 1 million trees, doing research to eliminate air pollution and initiating the BMA net-zero plan to reduce greenhouse gas emissions.
"It is a very challenging target, but we have to start talking about BMA net zero otherwise the solution will not be sustainable," he said.
On the social side, he said the BMA is focusing on improving public services to ensure that everyone will have access to quality education, good health and well being, as well as promoting equality in various aspects, such as in gender and political terms.
"I think the city has to promote equality, so it will spawn more creativity because in the future the key to driving the economy will be a creative economy," he said.
"And if you can promote the difference in thinking and idea, we can create a better economy in the future."
He stressed that governance is important to gain the confidence of the people. He said the BMA is using the Traffy Fondue platform to allow citizens to submit their problems, so the agency can tackle issues effectively.
He said the BMA also will allow open data to ensure transparency in the functioning of the BMA, adding that he has a plan to randomly oversee operations across 50 Bangkok districts every Sunday
“The city is a labour market. It's not the BMA who created the labour market, but in fact it's the private sector, so I think a collaboration among stakeholders is very important for the future," he added.
ESG makes businesses sustainable
“Sustainability, or ESG, is a global trend. It isn't something that’s nice to have, but it's something that we must have and we need to do it now," said Soraphol Tulayasathien, head of the Stock Exchange of Thailand (SET)’s corporate strategy division.
He made the remarks during the session “SDGs and ESG matter for sustainable businesses”.
He said 24 Thai companies have been included in the Dow Jones Sustainability Index and more than 40 companies figure in the MSCI Emerging Markets Index.
He added that the SET wants more Thai companies, especially micro, small- and medium-sized (MSME) companies, to adopt ESG in a meaningful way, without creating too much burden for themselves.
He said investors are paying attention to companies that are implementing ESG, both in general and specific issues, such as climate change, equality, employment and supply management.
He advised investors to invest in companies that take good care of all risks, while advising companies to use ESG as a tool to find opportunities, niche and ensure the company can maintain sustainability effectively.
"ESG is something that can help companies to manage risks because if companies don't take care of the environment, social or governance risks, something could go wrong and backfire on the companies," he said.
Meanwhile, Jia Kai Goh, strategy director of consulting firm Accenture (Singapore), said sustainability can boost the value of businesses in revenue growth, cost reduction, intangible brand image and risk management.
He added that micro- and SMEs with various potential can cooperate to achieve ESG and corporate social responsibility, as well as Sustainable Development Goals (SDGs).
"Driving sustainability or being sustainable is value creation," he said.
He also advised micro- and SMEs to ensure that they understand the value of their business, how to work sustainably with partners and how to tap financing to drive sustainability effectively.
"Each of the SDGs is well defined and each of them actually comes with specific indicators behind the scene, so it's a very good time to start in terms of articulating what we are trying to drive, about perspective and how we can start our measures," he said.
Net-zero business in action
Many CEOs worldwide are shifting to net-zero business models as the climate crisis is outpacing them, said Thanyaporn Krichtitayawuth, executive director of Global Compact Network Thailand.
She made this remark during the session "Net Zero in Action: Reduce your carbon footprint".
"CEOs who are not shifting to net-zero business models are putting their companies at risk," she warned.
Citing the Intergovernmental Panel on Climate Change's report on February 28, she said some 45 per cent of the world population — over 3.5 billion people — are classified as highly vulnerable to climate change consequences.
She also pointed out that the poorest people who are responsible for the least emissions of greenhouse gases will suffer the most because of the actions of people living in urbanised environments.
"Some 65 per cent of CEOs globally say they have already started advancing net-zero business models and solutions. Companies with annual revenues in excess of US$1 billion are further along the journey," she said.
She added that 78 per cent of CEOs of the largest companies in the world said they have begun advancing net-zero business models and solutions.
"Those who pollute the most must be held accountable for their actions and should protect the poorest who are being hit hardest due to their emissions," she said.
Technology and collaboration
During the panel discussion on the subtopic "New approaches for a greener future: innovative technologies and strategies", all panelists agreed and were aware that the ESG business model is not a trendy option but a must for companies of all sizes to sustain their growth.
They also demonstrated their companies' progress towards greater equality in terms of environmental conservation, social inclusion, and diversity. Furthermore, they agreed that innovative technologies and strategies are critical to achieving the ESG goal.
As one of the leading companies of Thailand with a history of more than a century of operations, Weerakorn Saitep, digital constructions director, The Concrete Products and Aggregate Co (SCG), said that sustainability was a key vision and mission that SCG prioritised. As a result, SCG has made long-term investments in ESG and provided a road map for a low-carbon economy as well as energy, water, and waste efficiency.
Piyabut Charuphen, managing director of BIG, said that while the oxygen and hydrogen that the company provides do not emit any carbon dioxide, the process of producing the oxygen and hydrogen consumes a lot of electricity. As a result, it is a huge responsibility for BIG to find innovative solutions to reduce reliance on electricity generated from fossil fuels.
In doing so, he added that BIG has partnered with one of the country's leading energy companies to provide alternative energy for them to use.
Anthony Watanabe, vice president and global head of environmental sustainability at Indorama Ventures, said that the most difficult aspect of his company's ESG journey is educating people about PET plastic, which is always blamed for environmental damage.
However, thanks to data collection and analytics technology, the company now has more than enough clear evidence to persuade people all over the world to use the right plastic, such as PET, as part of protecting the natural world.
Meanwhile, ESG is not only concerned with environmental issues, but also with social issues. Hence, all panelists shared their companies' support for their employees and local communities, such as providing upskilling and reskilling sessions, donating products to people in need, and promoting gender equality in the workplace.
In conclusion, Weerankorn, Piyabut, and Anthony agreed that more collaboration with the government sector is required to achieve ESG together. It is also necessary to provide some assistance to SME entrepreneurs.
ESG is the new business opportunity
During a panel discussion on the subtopic of "ESG in restoring global economic health", Marco Toscano-Rivalta, chief of the regional office for Asia and the Pacific, United Nations Office for Disaster Risk Reduction (UNDRR), stated that the world is currently facing enormous and mounting human, environmental, social, and economic losses due to disasters.
And ESG is critical to allowing the private and public sectors to move forward in a safe and sustainable manner.
Apinya Siranart, head of exploration, UN Development Program, suggested that using ESG as a term to persuade companies to take this path is insufficient. It would be preferable to use the term SDG (Sustainable Development Goal) instead, as this term would make the change, and the impact of this concept would bring more clarity to their businesses.
SDG does have some costs, but if a company follows this path, they will discover some new opportunities for their business that will provide some great returns in the future, Apinya added.
Cosima Stahr, senior adviser and co-lead finance, Adelphi Research, pointed out that ESG is a critical framework for knowing how to allocate budget and overcome current constraints.
When a company recognises its pain points and realises the value of its business, it will finally understand how to integrate long-term financial investments to create a more sustainable environment and equitable society, she added.
All the panelists also agreed that finance and investment are critical for a company to achieve ESG or SDG. The agenda is now a critical factor for many joint venture firms and global investors to consider when managing their capital.
While there is enormous capital available for investment, it is unfortunate that there are fewer companies that can clearly explain their ESG roadmap and benefits to convince the investors.
Marco suggested that the government issue strong regulations to compel companies to develop ESG strategies and action plans that they can publicly disclose.
He also stated that businesses must reconcile the concept and practice of ESG with the economy and disasters. This will assist the company in making the correct decision.
Apinya insisted that public awareness was still required for ESG to be widely adopted. She stated that doing business in the future must demonstrate how the company can have a positive impact on society and the environment.
She added that ESG investment is not a burden on the company, but rather will assist the company in identifying and unlocking a new way of doing business.
Cosima concluded that while global companies must now prioritise economic recovery, ESG should be included in their business plans as long-term strategies. This will be critical in identifying the right innovation for the company to sustain its growth and in assisting them in understanding the international dynamic.