At a glance
Many C-suite leaders and senior managers are passionate about making positive changes to their organisation’s ESG performance and reporting.
However, their level of knowledge and understanding of what is needed for meaningful change varies widely, says Cherine Fok FCPA, a partner in the KPMG ESG team in Singapore.
“This is something that really differentiates the business acumen of different leaders.
“There are leaders who take this by the horns and say, ‘I understand there is a cost, but let’s steer the company in the direction of a growth mindset. This is going to be an investment that benefits both the world and the company.’
“Then there are leaders who just see it as an expense.”
Creating change typically requires investment by companies, not just governments, Fok adds.
“Our role is to work with them to help them invest the right amount and in the right resources to bring this forward.
“If this is done well, it can create a strong competitive advantage for them.”
ESG corporate strategies
There are various measures a company can take to improve its ESG credentials, such as investing in organisations with strong sustainability credentials, Fok says.
“Investment, with its focus on returns, sits at one end, and philanthropy sits at the other. ‘Impact investment’ – with measurable social and environmental impact alongside a financial return – sits between the two.”
Altering the operational model is another immediate and powerful change companies can make in the ESG space.
An operational model can be changed to include energy efficiency measures. This reduces operational environmental footprint resulting from daily activities, Fok says.
“What this looks like depends on the type of company. In hospitality, you are dealing with the circular economy and supply chain waste. For a manufacturing company, you would need to reduce your consumption of energy, your consumption of water and change your source of energy to renewables.”
Social responsibility
While environment often takes the dominant focus when it comes to ESG, Fok believes it is important to give equal weight to the social aspect of ESG.
This is where operational changes in human resource (HR) departments can have a powerful impact.
“It is important to review HR policies and consider processes such as how you implement diversity and inclusion.
“Diversity is quite easy to implement, but inclusion is more subtle.
“How do you get your employees to respect each other’s views?”
Being able to provide a psychologically safe environment is crucial too, Fok says.
This means ensuring that people feel comfortable speaking up without fear of repercussion and that they can provide feedback without fear of retaliation.
Fok and her team help companies tackle these issues. They find it is often leadership that needs support in these areas, often through training.
“We look at what kind of interventions will help and who will have the greatest impact receiving them,” she says.
Fok’s recent work with a museum is an interesting example of how the environmental and social aspects can be considered holistically.
"There are leaders who take this by the horns and say, ‘I understand there is a cost, but let’s steer the company in the direction of a growth mindset. This is going to be an investment that benefits both the world and the company.’ Then there are leaders who just see it as an expense."
Fok helped to implement environmental strategies within the constraints of a heritage-listed building and specific humidity requirements to protect the museum’s artefacts.
“They also wanted help considering the social impact of depictions of slavery in the museum’s art collection. We looked at their accountability in relation to education around slavery, which they are in a powerful position to provide. Every sector has a role to play.”
Fok views ESG is a great field for accountants to consider.
“There needs to be more people who can apply their financial skills to this area and help to bring it to fruition. At the same time, they can help the accountancy sector to become more vibrant and relevant,” she says.
“The value of this is that it correlates to what the world is needing right now.”
Fok’s team is multidisciplinary, with experience in social sciences, environmental studies, environmental engineering and climate science.
“We also have folks from economics and accounting who can translate the team’s knowledge into business language and support the investment side of ESG,” Fok says.
One advantage of accountants entering the ESG space is that they can uncover solutions that their colleagues may not think of. Fresh eyes and digital literacy skills can make a significant difference.
ESG offers a “sweet spot” for accountants, Fok says. “With sustainability, you have a chance to be at the forefront and shaping it.
“You are working with clients to help them to understand the implications of their future choices, as opposed to what’s happened already.”
One piece of advice
“We should be driven by a sense of purpose in our work, and sustainability allows us to do that. If you can decide what you want to do and how you want to contribute, there is nothing holding you back from doing so.”
The price of 'going green' goes under the microscope
Five ways to implement ESG strategies
1. Shift to renewables.
Implementing solar panels, for example, may require an initial outlay, but can save money in the long term.
2. Consider digital sustainability.
Use crowdfunding sites for philanthropy, conduct meetings online to reduce travel and consider the green credentials of the app and data storage companies you engage.
3. Review human resources policies
Is the organisation providing a psychologically safe environment with clear diversity and inclusion policies?
4. Put energy efficiency measures in place.
Organisations should make sure they are using resources and equipment that are energy efficient.
5. Look for blended funding.
Big sustainability initiatives require big bucks, so look to government and philanthropy for support.
