ESG Panel 2022 May


Q1: Say a bit about yourself and your role in the context of ESG.

  • Asia rep of ESG Matters, Co-founder of Matters Academy
  • We help business build a better world and to themselves resilience

Q2: In the public eye, ESG is often linked to climate change and environmental concerns, though it is only one part of what ESG is, as the “E” in ESG. Would you say that the general understanding of ESG has been less exposed to the Social and Governance aspects, and why?

  • Climate change and carbon neutrality are big topic that attracts a lot of media coverage.
  • In fact, ESG is quite broad a subject. The stakeholder groups are very diverse, too.
    • You could see green groups, carbon consultants, green finance
    • You could see social enterprise working on diversity and inclusion
    • You could see news on green washing, whistleblowing, etc.
  • There are also organisations that concern ESG from a systemic perspective
    • For example, there is a charity advocating the vision of a Future-Fit Society – one which protects the possibility that humans and other life will flourish on Earth forever, by being environmentally restorative, socially just and economically inclusive.
    • Their mission is to catalyze this shift – by translating systems science into practical free-to-use tools designed to help business leaders, investors and policy makers respond effectively to today’s biggest challenges.
    • They’ve translated systems science into principles, goals, indicators and guides to help any business play its part in getting us there.
    • They provide Future-Fit Business Benchmark – that any business can use to guide, measure and report on real progress.

Q3: Looking at the United Nations’ 17 Sustainable Goals, which one would you say has been the main focus under ESG since its debut, and which one is dragging behind in addressing? From 2006 to 2022, has there been a shift in which sustainable goal is the main priority?

  • Referenced to the latest UN SDG report.
  • The global extreme poverty rate rose for the first time in over 20 years, and 119 to 124 million people were pushed back into extreme poverty in 2020.
  • There is a risk of a generational catastrophe regarding schooling, where an additional 101 million children have fallen below the minimum reading proficiency level, potentially wiping out two decades of education gains.
  • Women have faced increased domestic violence, child marriage is projected to rise after a decline in recent years, and unpaid and underpaid care work is increasingly and disproportionately falling on the shoulders of women and girls, impacting educational and income opportunities and health.
  • Notwithstanding the global economic slowdown, concentrations of major greenhouse gases continue to increase. With the global average temperature reaching about 1.2°C above pre-industrial levels, the climate crisis has well and truly arrived, and its impacts are being felt across the world.
  • The pandemic has also brought immense financial challenges, especially for developing countries – with a significant rise in debt distress and dramatic decreases in foreign direct investment and trade.

Q4: If you had to pick only 1 of the 17 Sustainable Goals for 2022, which one would it be and why?

  • SDG 3 – Ensure healthy lives and promote well-being for all at all ages
  • Health is a fundamental human right and a key indicator of sustainable development. In recent years notable progress has been made, but significant challenges remain.
  • These targets aim to reduce mortality and preventable deaths, including from non-communicable diseases, hazardous chemicals and air, water and soil pollution, while also promoting mental health, ensuring universal health coverage and access to sexual and reproductive health care services.
  • As the pandemic continues to unfold, The Sustainable Development Goals Report 2021 outlines some significant impacts in many areas that are already apparent. 
  • In the business world, this SDG has several 2030 targets to which every company can contribute. These targets aim to
    • reduce maternal mortality and preventable deaths of newborns and young children;
    • reduce mortality from non-communicable diseases through prevention and treatment;
    • promote mental health and wellbeing;
    • ensure universal health coverage and access to sexual and reproductive health care services;
    • substantially reduce the number of deaths and illnesses from hazardous chemicals and air, water and soil pollution; and
    • halve the number of deaths and injuries from road traffic accidents.

Subscribe to get access

Read more of this content when you subscribe today.

Q5: There are different metrics and measurements tools to conduct and create ESG data for company reporting and Investor Analysis. What would you say is the best approach for a company to create the most accurate ESG report?

  • It is important to embed Future-Fit thinking across our business, transparently disclosing our progress and sharing our journey. Prioritizing Future-Fit Goals to ensure a company is addressing the material challenges for their business and industry at a system level
  • open and transparency
  • compliance
  • benchmarking
  • The availability of high-quality data is critical, helping decision makers to understand where investments can have the greatest impact; but improved data collection will not happen without increased data financing. More resources need to be allocated.
  • Investing in data and information infrastructure is critical. The pandemic has taught us that weaknesses in data and information systems present an added and enormous challenge to decision makers. A year into the pandemic, only about 60 countries had data on COVID-19 infection and death rates that could be disaggregated by age and sex and that were publicly accessible. These data deficiencies have serious consequences for people’s lives. Policies, programmes and resources aimed at protecting people during this challenging time will inevitably fall short without the evidence to focus and hone interventions. Investing in data and information systems is not money wasted. Statistical offices around the world have embraced innovative approaches and forged partnerships, improving the availability of data for evidence-based decisions. Increased investments in national data and statistical systems and the mobilization of additional international and domestic resources will be imperative if we are to build back better from the crisis and accelerate implementation of the SDGs.
  • More info

Q6: In the context of a company reporting, or investing, would you say ESG is an expense or a profit ?

  • I would say from an extra-financial perspective, ESG is about break even and positive pursuit as a bonus.
  • The 4-quadrant
  • Break-Even Goals represent the line in the sand every business must strive to reach to be sure it is not slowing down progress to a flourishing future.
  • Positive Pursuits identify the socially beneficial and environmentally restorative outcomes any business may pursue to speed up our progress.
  • For example, in Orsted report, they report progress towards breaking even. Elaborate.
  • LD Pensions’ Head of Equities Kristoffer Birch says: “Future-Fit is a framework that helps us assess sustainability in a meaningful way. As a pension fund for a wide and diverse group of members, we need to look at sustainability in a way everyone can agree on. This journey of becoming environmentally restorative, socially just and economically inclusive is just that. Future-Fit has shaped the way we allocate capital towards positive pursuits investments, as well as how we assess the sustainability of our investments in general.”
  • Seb Beloe, Head of Research at WHEB, adds: “We are doing this because we think it will make us a better business. Our stakeholders want to work with and for businesses that they can believe in and trust. The Future-Fit framework is a great platform that will help us make robust business decisions.”
  • Juhi Shareef, Chief Responsibility Officer at thl, agrees: “Our public commitment to the Future-Fit Business Benchmark in 2019 was an acknowledgement that a change in pace is required to tackle the complex issues the world is facing.  Since then, the Australian and US bushfires and the global impacts of COVID-19 on the travel and tourism industry have tested our resilience and reinforced our commitment to change.  We believe our commitment to becoming a Future-Fit Business will support thl’s long-term sustainability and resilience in the face of future disruption.

Q7: There is the expression “Green Washing”, which is the false impression or providing misleading narrative about how a company and its products are environmentally sound or positive in an ESG context. Does Green washing comes mainly from intentional malpractice, or can it happen also in the case of companies not using ESG metrics properly ? Which one do you think is the most prevalent in Green washing, malpractice or misuse / misunderstanding of ESG metrics?

  • A lot of them is caused by mis-conception.
  • Encourage companies to be transparent about the great progress they are making, and also acknowledge the challenges still ahead. This ambitious commitment and authentic communication will help drive positive action, which is ultimately what this is all about.
  • Kristoffer Birch of LD Pensions: “We are aware that we will look poor on some important measures, but we are also aware that that is what is needed. It is not greenwashing but positive changes that will create a better world. You need to use tools make it really easy to get a first assessment of your company and implement changes from there.
  • thl’s Juhi Shareef has an answer: “For business, society and the environment to thrive, we must create system value by becoming genuinely sustainable: responsible, regenerative and resilient. So be bold, find your why, engage your stakeholders and make a start.”

Q8: In the last 2 years, 2020 to 2022, due to the pandemic of coronavirus, we have seen a positive impact in pollution index, due to people moving and travelling less, factories being closed down. Also activities such as deforestation dropped due to social distancing and work regulations. Now that social restrictions are being lifted in most regions and that countries wants to re-energized their internal economies, are we going back to the same level of pollution and deforestation that we had before covid, what have we learned from the last 2 years that could make a difference in ESG in 2022?

  • According to the latest UN SDG report, The COVID-19 pandemic serves as a mirror for the world. It reflects deeply rooted problems in our societies: insufficient social protection, weak public health systems and inadequate health coverage, structural inequalities, environmental degradation and climate change.
  • The pandemic has exposed and intensified inequalities within and among countries. The poorest and most vulnerable people have a greater risk of becoming infected by the virus, and bear the brunt of the economic fallout. The crisis has threatened the livelihoods of 1.6 billion workers in the informal economy. The collapse of international tourism disproportionally affects small island developing States. And vast inequities exist in vaccine distribution: as of 17 June 2021, around 68 vaccines were administered for every 100 people in Europe and Northern America compared with fewer than 2 in sub-Saharan Africa.
  • The climate crisis, the biodiversity crisis and the pollution crisis persist, despite the pandemic. Concentrations of major greenhouse gases continue to increase despite the temporary reduction in emissions in 2020 related to lockdowns and other COVID-19 response measures. The world remains woefully off track in meeting the Paris Agreement. Biodiversity is declining, and terrestrial ecosystems are being degraded at alarming rates. Around the world, 1 million plastic drinking bottles are purchased every minute, and 5 trillion single-use plastic bags are thrown away each year.
  • Building back better requires effective multilateralism and the full participation of all societies. This global crisis demands a shared global response. In the face of the many challenges we face, a unified vision of coherent, coordinated and comprehensive responses from the multilateral system is more important than ever. Since the pandemic affects everyone, everywhere, the implementation of solutions requires action and participation from all sectors of society, including Governments at all levels, the private sector, academia, civil society and individuals – youth and women, in particular.
  • We are at a critical juncture in human history. The decisions we make and actions we take today will have momentous consequences for future generations. Lessons learned from the pandemic will help us rise to current and future challenges. Let us seize the moment to make this a decade of action, transformation and restoration to achieve the SDGs and make good on the Paris Climate Agreement.

Q9: Looking at developing countries, is sustainability achievable in cost-driven markets? How does ESG fit in for companies moving their operations to lower their costs and for developing countries looking at economic growth as a priority ?

  • Why systems thinking is critical
  • 250 years ago, there were less than a billion people on Earth.
  • Now there are 7.5 billion people on the planet, with 2 billion more set to join us by 2050.
  • systemic response is needed. The so-called Triple Bottom Line of People, Planet and Profit has never been more relevant. But we need to take a fresh look at what this really means. The global challenges we face are hugely complex and interdependent. In short, they are systemic – and to tackle them we must take a systems-based approach.
  • Business can only thrive in a strong society. Society, in turn, can only prosper if its needs are being met by a healthy natural environment. These relationships, best described as nested dependencies, are key to understanding how our global economy operates.
  • We must embrace these systemic interdependencies if we are to identify exactly how – and how much – we must change the way we do business. Only then will we be able to achieve the SDGs and set ourselves on a path to a Future‑Fit Society: one which is socially just, economically inclusive, and environmentally restorative.
  • We must instead equip and encourage all economic actors to pursue rapid and radical change in a coordinated way. And that demands a fundamental rethink of what it means to create value in the 21st Century. So that’s where we will start.
  • To understand the full extent of a company’s impacts – good and bad – we must think in terms of Creating System Value.
  • No business decision is ever free of potential trade-offs. But a systems-based approach makes it possible to identify otherwise unforeseen issues. This allows negative trade-offs to be anticipated, avoided, or at the very least addressed.
  • This kind of holistic decision-making must become the norm if we are to avoid – and eventually reverse – damage to our natural systems and social fabric. This is what we mean by Creating System Value.
  • The Future-Fit Business Benchmark was developed specifically to help companies put this concept into practice. The first step in this development was to examine the systems contexts shaping business today.
  • Strengthen the means of implementation and revitalise the global partnership for sustainable development
  • To realise the sustainable development agenda will require effective, ambitious partnerships between governments, the private sector and civil society – at a global, national and local level.
  • For such partnerships to succeed, every party needs a shared vision of where we need to get to, plus confidence that all other parties are willing and able to play their part. By embracing the pursuit of future-fitness, any company – no matter what its size or sector – can show it is serious about making the SDGs a reality.