ESG no longer a choice but a necessity, say CEOs at women’s summit
A stellar group of women CEOs shared their companies' approach to incorporating ESG to drive growth during Saturday's morning session of the Global Summit of Women in Bangkok.
Under the topic "How ESG Informs Business Strategy", the CEOs agreed the pandemic has spurred people worldwide to demand social responsibility from companies that exploit resources from nature and advantages from society.
However, ESG is not the same as CSR (Corporate Social Responsibility), said Kattiya Indaravijaya, CEO Kasikorn Bank (Thailand). She explained that ESG provides a company with more advantages to boost profits and competitiveness while CSR is used to build image and brand awareness.
She insisted that ESG is no longer a choice but a necessity as companies adapt to big changes in consumers’ behaviour and mindsets over the past two years. A recent study showed that 74 per cent of consumers are willing to spend on goods and services that comply with the ESG strategy.
Sharon Dayoan, chair and CEO, KPMG RG Manabat & Co (Philippines), added that there is a price to pay for adopting an ESG strategy. The ESG process may not be profitable in the beginning, she said, but it would reward companies with accountability and sustainability.
ESG or Environmental, Social, and Governance standards have received growing attention in the past few years as people and communities become more aware and concerned about the environment and society. ESG is now being applied by analysts and investors across the world as a non-financial factor to assess a company's risk and growth opportunities.
Irene Natividad, president of this year’s Global Summit of Women, said even though ESG was not required by law, companies are adopting it in response to the ever-growing demands of investors, millennials and regulators to recognise consumer concerns on climate change, sexual harassment, discrimination and local fair trade.
She pointed out there is an increasing trend away from an emphasis on bottom-line success to a company's value being assessed on how well it has performed on ESG metrics.
Elena Butarova, head of Bangladesh, Malaysia, Nepal and Vietnam for global insurer MetLife, noted that most companies are focusing only on the E (Environment) rather than the S and G (Social and Governance). She suggested this was because environmental impacts are often obvious and work to protect the environment can be easily measured and assessed.
She said companies could correct this imbalance by adopting practices to support gender equality, respect diversity, and improve their local community's quality of life.
Chadatip Chutrakul, CEO of real estate developer Siam Piwat (Thailand), said one of the most challenging elements of adopting ESG strategy was dealing with differences of behaviour and mindset among staff. Companies need to find ways of motivating staff to accept the ESG concept, which includes mutual respect for other's rights.
Sustainability, meanwhile, did not apply to the company’s operations alone but to the whole surrounding community. Chadatip said this means that the company is responsible for creating a support system that allows both it and the local community to grow together.
She cited the example of Siam Piwat’s "Sook Siam" (Thailand Happiness) project that offers low-rent pitches for small vendors to sell OTOP products at the luxury ICON Siam mall. She said the project has earned US$50 million in revenue over three years, with more than 100,000 visitors per day.
Dian Siswarini, CEO of Indonesia’s leading telecoms firm, PT XL Axiata, said ESG has been part of the company's vision since the beginning. As such, she said her company had continued investing to improve infrastructure since its founding, believing that infrastructure drives long-term growth of the country.
The ESG practices may be tough and some companies may feel exhausted but it should never stop. It is because ESG facilitates top-line growth in the long run, attracts talent, reduces costs, and forges a sense of trust amongst consumers. Dian added.