The pandemic has turned the spotlight on many critical sustainability issues we face alongside the growing concern about how these challenges might accelerate in the future for businesses. In times like this, company leadership during this Covid-19 crisis should sharpen their focus on the adoption of environmental, social and governance – the risks and opportunities.
ESG is heading mainstream as the growing interest from the investor piques beyond robust risk management but practices, progress and challenges that intertwine the environment, health and economy. There is a noticeable trend that smaller, medium-sized businesses are seeing the benefits of being green conscious that open new doors for growth. The big agenda on sustainability is no longer limited to listed companies.
CLA Global TS (formerly Nexia TS) speaks to sustainability professionals and business leaders at a recent webinar titled, ‘The 3Ps of Preparing Your Business in a Post-Covid World’. “As leaders, we need to prepare our business to cope in a post-Covid world – in terms of mentally, strategically and sustainably,” said Henry Tan, Group CEO & Chief Innovation Officer of CLA Global TS. “If we did not react to the challenges arising from this pandemic to make a better change to our business, to strive and do better than the last, this pandemic would have gone to waste.”
While most are spurred to invest responsibly however often baffled by the industry terms bodied around by professionals and clients alike. Through the lens of an investment professional, Fergus Boyd, Investment Management Partner of UK accounting firm, Smith & Williamson, said: “Investors are taking a holistic approach to investment analysis, where material factors – both ESG and traditional financial information, are identified and assessed to form a responsible investment decision.”
The distinct differences exist based on your investment needs evolving beyond traditional financial measures that may have a material impact on the performance of that investment. Fergus also notes that there has been an increase of younger generations emphasizing the importance of environmental and social impacts, and more clients are demanding transparency about how and where money is invested.
It goes to show that ESG is the business plan for the planet. Embracing sustain-ability is not a distant goal but a journey that strengthens the resilience of our communities and businesses. A com-mon struggle that companies may face while attempting to identify these goals are the key material topics to report on, cited Pamela Chen, Head of Internal Audit, CLA Global TS (formerly Nexia TS).
She adds, “ESG revolves around the company’s value – what drives the company. An example of a value driver would be people – talent. This cascades down to your employee engagement which translates as a social topic in your sustainability framework.”
On the other hand, accountability is key to sustainability claims where companies can’t just talk the talk and not walk the walk. The ability to substantiate the claim and demonstrate clarity in such disclosures are vital to investors. Greenwashing is becoming a tipping point for some companies who are exposed to making false or misleading claims on being environmentally friendly than they really are.
Instead of slowing our progress towards achieving sustainability goals, verification mechanisms are essential to avoid deceptive marketing. “ESG is all about mindset,” said Daphne Ng, Co-founder of Dedoco. “The ‘s’ (social) component is in relation to your stakeholders – customers, investors and employees. This will set the tone on how a company can organise their ESG strategies.” The rise in caring for the greater good matters to everyone in the planet. It is no longer an option but something that all of us cannot afford to ignore.
About CLA Global TS (formerly Nexia TS)
Founded in 1993, CLA Global TS (formerly known as Nexia T.S.), is an award-winning Asia-Centred Business Advisor. An independent member firm of CLA Global Network, CLA Global TS provides a full spectrum of professional services including, but not limited to Assurance & IPO Reporting, Tax, Risk Advisory, Valuation, Insolvency & Restructuring, Sustainability & Climate Change Advisory and more.
For more information, visit CLA-TS.com.