MAKATI—Although sustainability has become the core priority of today’s corporate boards, the need for directors to enhance accountability and operationalize  environmental, social and corporate governance (ESG) principles in leadership strategies has outpaced performance. For companies looking to establish their presence for the long-haul, this can only pave the way for a more resilient, high efficiency future. 

 

This was the overarching message delivered in the webinar organized by the Institute of Corporate Directors (ICD), the Institute for Climate and Sustainable Cities (ICSC), and The Climate Reality Project Philippines. 

“In order to survive and thrive over the long term, crises like the pandemic and extreme weather events have taught us that we need to establish resilience at the heart of our strategy and policies. Greenwashing is not acceptable, as it does not address the root of the problems,” said ICD Trustee and Climate Reality warrior Atty. Pedro H. Maniego Jr. who gave the opening remarks in the last part of the Pilipinas: Aspire, Rise, Sustain corporate governance series.

“ESG is an important part of the total valuation of a company, and greenwashing must be unthinkable as the reputational damages would be great. Long-term stakeholder value is more important in the long run than short term profit,” said Commissioner Ephyro Amatong of the Securities and Exchange Commision (SEC). 

Shai Ganu, governing council member of the Singapore Institute of Directors and managing director of Willis Towers Watson, talked about the driving forces of ESG principles for businesses – the most significant being global investors, followed by regulators, employees, and customers. Citing data from multinational investment company BlackRock, Ganu said that investments in sustainable assets amounted to USD 288 billion in 2020, a 96% increase from the previous year.

“The ESG landscape is rapidly evolving. The emerging priority now for companies is to safeguard the interest of all stakeholders. It’s not just about the Sustainable Development Goals (SDGs), it’s also about how these ESG measures are embedded in how management teams run their businesses,” he said.

Stewardship Asia CEO Rajeev Peshawaria tackled the importance of reimagining leadership and governance, highlighting the importance of steward leadership which he defined as the persistence to create a collective better future. 

“Business transitions to sustainability can create profit, it can deliver USD 10.1 trillion worth of annual business opportunities and 395 million jobs by 2030,” he said. Peshawaria also challenged corporate directors present to “create profitable growth by addressing the existential crises the planet and humanity are facing.”

SEC has issued sustainability reporting guidelines for publicly-listed companies (PLCs) in 2019 to help them monitor and report the significant impacts of their sustainability initiatives. This year, the Commission is making sustainability reporting mandatory to align the country’s compliance standards with neighboring countries such as Thailand, Indonesia, Malaysia, and Singapore. Commissioner Amatong announced that 92% of PLCs have filed their sustainability reports, despite the limitations brought by the COVID-19 pandemic.

More corporate directors globally are taking up ESG and climate competence certification programs, as this is what global investors are asking from private companies, said Helle Bank Jorgensen, CEO of the Canada-based Competent Boards.

“We draw upon renowned board members and executives to share their insight and experience with peers. We need to make sure that we have knowledge, and that we make informed decisions. None of us should be in silos, we are impacting and we are being impacted,” she added.

Providing more context for Philippine businesses was Competent Boards ESG Research Lead Elvin Madamba, identifying climate change as one of the main ESG concerns. “Climate change is a material and financial risk. From a business perspective, climate change impacts long-term value and to ignore that is to ignore one’s fiduciary duty as corporate directors,” he said.

Madamba also listed human rights and corruption as ESG issues of great concern for the private sector, which makes the UN SDGs crucial. “Companies would be wise to act on the SDGs. They would also benefit from diversity, as research has shown that it increases productive discussions, better decisions, leading to improved outcomes. Capital, when allocated and mobilized for good, can do so much,” he added.

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This press release was originally published at the ICSC’s website.

“Pilipinas: Aspire, Rise, Sustain” is a three-part series certified by the Securities and Exchange Commission, as participation in this webinar meets the recommended best practices for continuing directors education prescribed by the SEC. The next two webinars will be on November 5 and November 12. For more information, visit this site.