Auzzi Shopping

Aon: Asia Pacific Companies See ESG Issues of Critical Importance; However, More Work Is Needed To Fully Integrate Measures

  • Written by Auzzi Shopping
  • 58 percent of companies surveyed say ESG is critical to the long-term success of their business
  • Only 29 percent of companies surveyed include ESG-related goals and key performance indicators for their C-suite
  • 34 percent of companies surveyed have a dedicated ESG function

    SINGAPORE - Media OutReach - 18 April 2023 - Aon plc (NYSE: AON), a leading global professional services firm, today released its 2023 Asia Pacific Corporate Governance and ESG Survey Results which found that while the surveyed companies indicate environmental, social and governance (ESG) issues are critical to their organisations, most are lagging in integrating ESG measures – either via aligning to goals and key performance indicators (KPIs) or allocating a dedicated function to monitor ESG issues.

    Despite 58 percent of surveyed companies stating ESG is critical to their long-term success, only 29 percent include ESG-related goals and KPIs for their C-suite, with most companies in Asia Pacific still in the early stages of using ESG metrics and developing their ESG profile.

    While only 34 percent of companies reported having a dedicated ESG function, business strategy – instead of compliance requirements - is the primary driver of action on ESG in Asia Pacific, as the regulatory environment is still evolving in most of the surveyed countries.

    Linking ESG to financial incentives is needed

    Accelerating and expanding ESG efforts requires boards and management in the region to better understand the link between ESG and business strategies and use metrics and performance measures as their ESG maturity improves.

    "Incorporating ESG performance criteria into executive compensation plans means ESG metrics are more likely to align with the company's overall strategy and compensation plans. It is becoming clear that failing to address and integrate ESG metrics in the future will expose companies to reputational risk, financial impacts and regulatory consequences as they navigate new forms of volatility," said report author Boon Chong Na, advisory partner and corporate governance and ESG lead, Human Capital Solutions for Asia Pacific at Aon. "However, while improving ESG metrics, companies need to manage both the financial and non-financial aspects, as shareholders expect them to do well while also doing the right thing."

    Compared with privately held companies, listed companies are twice as likely (48 percent) to have clearly defined ESG metrics and to link them to C-suite performance.

    Partner and Head of People Solutions for Australia at Aon, Simon Kennedy, said while difficult to make the transition to linking metrics depending on where listed or private companies are in the process of their ESG journey and with some markets ahead of others in the region, it is no longer enough to commit to targets that are not tied to either a financial incentive or disincentive.

    "The first step is to align ESG targets with business strategies and goals. Companies can retain their existing measures, no matter how simple, and enhance them as they move forward. Ideally, ESG targets need to be as measurable as financial targets, preferably using audited numbers based on established standards," said Kennedy.

    Board education also key to integrating ESG

    While 61 percent of respondents reported that they involve their entire board in decisions concerning ESG, 41 percent do not have a formal process or training program in place to educate board members about contemporary ESG topics.

    "Among survey participants, most companies currently conduct only one or two education sessions on ESG per year for their boards. Whilst directors are expected to be deeply involved in developing and overseeing ESG strategy, training is required to ensure board members are adequately informed and capable of making sound judgements about the ESG risks and opportunities under their governance," said Kennedy.

    Green talent becoming a priority

    Another key factor that emerged in the report is the issue of green talent, as nearly one-third of surveyed companies plan to introduce or expand ESG roles, with 76 percent of positions being hired at the mid-professional level.

    "Companies will need to embark on job redesign and upskilling initiatives and invest in their talent to meet this growing demand, either through external university programs, micro-credentials, sustainability certifications or internally managed employee training. A comprehensive talent strategy is essential to keep businesses competitive, and a robust workforce reskilling program can help build a more resilient workforce, enhancing the potential of existing employees even if external talent pools are shrinking," said Na.

    Further key findings from the report include:
    • 25 percent of private companies and 50 percent of listed companies have a dedicated ESG team.
    • 30 per cent of new initiatives in 2023 involve re-skilling or upskilling the workforce on ESG.
    • 61 percent of boards are actively monitoring diversity, equity and inclusion (DE&I).
      "In Asia Pacific, companies around the region are taking steps to improve their performance on ESG, either to become more attractive to investors or as an aspirational endeavour unrelated to regulatory requirements. It is not a homogenous market, though countries such as Australia and Singapore are ahead of the curve in terms of ESG maturity," concluded Na. "To achieve ESG improvement, companies need to learn from best practices across the region and extend their ESG thinking and behaviours beyond the boardroom so that they make better decisions that permeate the entire organisation. Integrating financial incentives and a greater focus on education, together with enabling technologies and analytics, reinforced by converging ESG standards, will ensure companies are not left behind as improved ESG performance gains pace in the region."

      Hashtag: #Aon

      The issuer is solely responsible for the content of this announcement.

      About the survey

      Aon conducted the ESG survey of senior leaders of both private and publicly listed companies across all industry sectors between October and December 2022. More than 255 companies participated from Australia, India, Singapore, Japan, Malaysia, and China. Read the APAC ESG report

      About Aon

      (NYSE: AON) exists to shape decisions for the better — to protect and enrich the lives of people around the world. Our colleagues provide our clients in over 120 countries and sovereignties with advice and solutions that give them the clarity and confidence to make better decisions to protect and grow their business.

      Follow Aon on , , and . Stay up-to-date by visiting the and sign up for News Alerts .



Today's Features at Auzzi

Steam Carpet Cleaning vs. Shampoo Carpet Cleaning: Which One is Better?

When it is all about maintaining the cleanliness and appearance of your carpets, choosing the right cleaning method is crucial. Two popular techniques are steam carpet cleaning and shampoo...

From Mini to Long: Get to Know Your Dress Lengths

Dress lengths vary from super short to floor length, and everything in between which are all just as beautiful! Defining your style is simple once you find the dress length that’s right ...

Hosting a New Year’s Eve Party – Top Tips from Pro Event Managers

Christmas and New Year are favourite festivals Down Under and if it is your turn to be the host this year, there is much to do as we are only a couple of months from the end of the year. T...

Ensuring Fair Scheduling Practices with Online Rostering Software

"Maintain equity in employee scheduling with Online Rostering Software. Ensure fairness, boosts productivity!" Fair scheduling practices are essential for promoting a positive organisatio...

How Novated Lease Pay Calculator Works & Affects Your Salary?

If you’re considering a novated lease, you may have come across terms like “salary packaging calculator” or wondered about the “novated lease pay impact” on your take-home salary...

How to Choose Budget-Friendly Artificial Grass Without Compromising Quality

It can be quite a tough task to choose affordable artificial turf that does not compromise on quality. However, if one knows what makes artificial turf appealing and long-lasting it might ...

Bathroom Renovations in Bentleigh: Transform Your Space with Style and Functionality

Bathrooms are the centre of the home, the most trafficked area, and determine property value. Every day the trends of the buildings are changing in Bentleigh. People are opting every day t...