ESG: More Critical Than Ever Before – Aon Research Reveals

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Environmental, social and governance (ESG) considerations are becoming more critical to investors than ever before, according to groundbreaking research from Aon.

According to the latest Aon survey, most companies in the Asia Pacific region – 58% – consider environmental, social, and governance (ESG) issues as critical to their long-term success. However, a lower percentage of only 29% have set specific ESG goals and KPIs for their C-suite.

The “2023 Asia Pacific Corporate Governance and ESG Survey Results” report discovered that only 30% of surveyed companies have a specific ESG department. The report also identified board and management members and financial stakeholders as the primary proponents of ESG initiatives in the area, rather than government regulation, which Aon states is still in the developmental stages in many of the countries surveyed.

Here are the other significant drivers of ESG concerns:

For listed companies:

– Customers: 18%

– Regulators: 18%

– Community at large: 11%

– Employees: 5%

– Competitors: 0%

For private companies:

– Customers: 17%

– Regulators: 15%

– Community at large: 17%

– Employees: 8%

– Competitors: 1%

The report also says educating the board on ESG is crucial for its integration into the market. Although 61% of those surveyed stated that their board is involved in ESG decisions, 41% needed a proper system or training program to keep board members informed on current ESG topics.

Boon Chong Na, who is the advisory partner for Human Capital Solutions at Aon Asia Pacific and also leads the corporate governance and ESG efforts, stated that by including ESG performance standards in the executive compensation plans, the ESG metrics are more likely to be in line with the company’s strategy.

“It is important for companies to use ESG metrics to avoid potential problems such as harm to their reputation, financial losses, and regulatory issues in uncertain times. While enhancing ESG metrics, companies must consider financial and non-financial factors, as shareholders anticipate good performance and ethical practices,” he said.

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