Developing a ESG savvy leadership team.

In a recent meeting with Okka Phyo Maung, the CEO and co-founder of #RecyGlo we discussed ESG reporting, the circular economy, and developing an ESG-savvy leadership team. This led to insights into ESG reporting, sustainability, and the circular economy in terms of driving business goals and execution strategy.

Firstly, awareness and interest in ESG reporting and sustainability strategy are very different across ASEAN and also in company size, from Small-Medium Enterprises (SME) through to large enterprises (LE) and Private versus Public Listed Companies (PLCs).

Europe has adopted ESG reporting and now increasingly requires PLCs and major private corporations to disclose their goals and strategies for Sustainability and Climate Impact. Public-listed companies in Thailand, Singapore, Malaysia, Indonesia, and the Philippines also face the trend of increasing ESG reporting and climate risk mitigation.

Companies are cascading these requirements along the supply chain to ASEAN supplies in fashion, garment, textile, agriculture and fisheries, food and beverages, household and consumer appliances, electronic assemblies and components, and plastic and metal products.

This creates a competitive threat for suppliers, who must seek certification and compliance OR risk losing lucrative supply contracts.

Green financing is offered across ASEAN to help SMEs, and LEs invest in sustainability strategies. This provides vital benefits to a company;

·????? Firstly, around 300bps lower interest rates and significant interest cost savings.

·????? The approval process and the award of a green loan are valuable proxies for the company's green certification.

·????? New KPI and ongoing monitoring and reporting enable a new focus by the Board of Directors and Management team.

Green financing often covers the following eligible investment areas:

·????? Adoption of Solar and wind energy

·????? Adoption of more efficient equipment for manufacturing, heating and cooling.

·????? Retrofitting? buildings to green LEAD status

·????? Waste management

·????? Circular economy

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Multinational corporations (MNCs) and publicly listed Companies (PLCs) ?often have the resources in head office to embrace ESG reporting and Sustainability Strategies. They can afford to educate and train the Board of Directors and C-Suite to have a Sustainability-savvy leadership team. However, moving done the size scale, MNC regional offices in ASEAN often need the education and training. Likewise, ASEAN SME/LE and even PLCs need education and training.

Financial institutions, that is, lenders and private equity investors, also need to meet disclosure requirements by making their loans and investment portfolios compliant with ESG reporting. Both Financial Institutions and their investment portfolio companies need education and training.

Once there is an ESG and sustainability-savvy leadership team, the next step is to adopt a platform and conduct an initial ESG audit to determine the initial baseline for reporting.

The extensive awareness and desire for action in starting the ESG reporting journey is understanding the big WHY.? In a maturing ESG reporting environment, the why is about compliance, avoiding fines, carbon tax accounting, and ensuring ongoing access to equity and debt. As a supplier to a European company, there's the threat of compliance or contract loss. For all companies, it is about preserving the brand, mitigating adverse public relations campaigns and attracting and re-training the best talent.

This also then identifies the Who needs to be ESG and sustainability savvy.? The ESG data straddles most functional areas: Environment data is often physical data from the production and operations side; Social data is often from Human Resources; Governance Data is from the Board of Directors and down all levels of management and staff. Finance and internal audits are performed across all of these data sets.

When starting the ESG journey, beginning with an initial baseline audit and a simple-to-use and proven monitoring and reporting platform is critical to keep the initial burden light. The initial audit and platform report need to identify low-hanging opportunities. ?

The ESG journey and developing an ESG and sustainability-savvy governance and management team also involve developing and sharing a common set of frameworks and terminology across the organisation.

The article is the opinion of the author, Paul Zaman.