Asia-Pacific C-Suite Insights – Global Compliance News

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As 2021 drew to a close, we invited C-suite leaders from across Asia-Pacific to share their insights and concerns about engaging with long-term ESG goals. The key themes presented here are drawn from our closed-door panel discussion, which was conducted under Chatham House rules.

Participants identified five key facets of the challenges, opportunities and opportunities facing C-suite leaders in the region as they strive to advance ESG strategy and drive meaningful action.

1. Private sector dynamics

Big companies to step up

Companies understand that it is their responsibility to drive ESG agendas in the region. Yet for many small and medium-sized enterprises (SMEs), knowing where to start and what processes to implement is a common struggle. There is an opportunity for large corporations and consultancies to play a vital role in taking the lead in helping SMEs kick-start their decarbonization journey.

Stakeholder pressure is increasing

Companies are under pressure to address ESG issues from stakeholders, including investors, shareholders and customers. In recent years, the proportion of questions about ESG issues posed by investors at general meetings has increased significantly. While these external pressures have contributed to accelerating the process of integrating environmental criteria into internal decision-making processes, companies must continue to demonstrate how they will meet their ESG commitments.

2. Manage Investor Considerations

Commercial viability

When setting ESG objectives, executives said it’s important to remember that from an investor’s perspective, ESG is about commercial viability, not development finance. Often this is overlooked when setting goals. This is especially true for the coal reduction debate, as issues that are crucial for governments when setting their net zero goals, such as energy security and energy affordability, may not be in the interest of investors.

Goals vs Results

Coal reduction and energy debates are becoming increasingly complex as investors do not always see their best interests reflected in projects aimed solely at achieving government net-zero goals such as energy security and energy projects. energy accessibility.

360° responsibility

C-Suite executives said the social (i.e. “S”) aspects of ESG are hugely important in Asia Pacific and the risk of not getting it right is costly. They highlighted the need for fair and equitable practices at every stage of an ESG project, as there are always risks of not adequately addressing social issues in a good environmental project. Society expects all organizations in all sectors to take greater responsibility for meeting sustainability requirements, although it is still difficult to measure social impacts.

3. COP26 and global signage

Increased control and focus after COP26

COP26 has made ESG considerations a top priority for businesses around the world. The mandate is clear: each company must develop an ESG strategy and adopt new operating models to help meet the COP26 commitments. Positive outcomes from COP26 include the prospect of more than $130 trillion being channeled to fund net zero projects. The ongoing challenge is for companies to commit to a detailed and achievable plan.

Eyes on the coal industry

COP26 also painted a grim reality that more needs to be done to keep the global temperature below the 1.5°C rise. The failure to reach a transformative deal on coal reduction suggests that the coal industry now faces a significant dilemma over whether to prioritize economic development or the future of the planet.

4. ESG-aligned technology

Harnessing current solutions for future good

Advances in Internet of Things (IoT) and Artificial Intelligence (AI) technologies can help companies take concrete and productive steps now to meet their energy management and efficiency commitments. by 2050. C-Suite leaders recognize that the technologies to achieve the 2050 goals do not exist today and it would be an illusion to wait for these technologies to be developed.

Instead, leaders believe more needs to be done with existing technologies to drive energy efficiency and shift to renewable energy sources as much as possible. The imminent priority is to invest in technologies and projects now, in order to facilitate the success of the energy transition in the longer term.

5. Development of ESG regulations

An evolving journey

C-Suite executives acknowledge that ESG regulatory frameworks are being developed, particularly in Asia-Pacific. Currently, businesses continue to navigate fragmented regulation in the region and globally, taking a pragmatic approach to determining what to consider as “lowest” or “highest” common denominator regulation. Rules are developed at different speeds, with local priorities affecting their proposed scope and application. In this context, the market will have to rely on global frameworks, such as the one developed by the Task Force on Climate-related Financial Disclosure (TCFD), which comes into force.

Learn and improve

Executives agree that Europe is leading the way in ESG regulation, but note that a uniform ESG taxonomy is unlikely to emerge. Instead, they expect to have to adhere to different jurisdiction-specific laws. Regulators around the world, including in the Asia-Pacific region, are identifying EU best practices as benchmarks and adapting them to create their own guidelines and in their documentation. Such developments will not only provide a regulatory framework for businesses, but also level the playing field in the region.

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