Chin Loo Low, Head of Asia Pacific Region EDGE Strategy, on the impact of ESG trends and the Covid-19 pandemic in APAC.
Gender balance, diversity and inclusion have gained traction in APAC over the last decade. What are the driving factors?
“Diverse teams are a recognized business advantage and there is an impatience and demand for diversity from stakeholders, including employees, investors and policy makers. The question is, why then are some companies still willing to rate poorly on gender equality in the workplace?
This is where sustainability reporting and ESG trends are influential. A big corporate theme over the past decade has been ESG. In Asia, rapid growth in large developing countries like China and India have come at the cost of the environment. This is no longer acceptable. Companies are now compelled by mandatory sustainability reporting to disclose carbon emissions, labour practices and material risks arising from their businesses and supply chains.
Gender balance, diversity and inclusion put the ‘S’ in ESG and companies are starting to prioritise it more. Organizations realise now they need to assess the material risks that arise out of poor social practices and governance. Thankfully legislation is finally catching up, with progress being made in sexual harassment laws, compulsory paternity leave and quotas of women on boards, for example.”
How has the Covid-19 pandemic impacted this?
“The pandemic has compounded the age-old problem of how women cope with the double-barrel syndrome of having to work and, in many cases, also act as primary caregivers.
Lockdowns around the globe have increased care burdens and taken women out of the workforce. The UN estimates that the pandemic could roll-back 25 years of progress in the area of gender equality. Unless something is done to address this, we face stark repercussion due to greater gender inequality, including a significant increase in risk of women dying from poverty and slower economic growth.”
APAC is a huge and hugely diverse region. Given this, how can ESG metrics help bring consistency to assessments of workplace equality?
“Because APAC is so diverse and its cultures so different, companies operating in the region should adopt region-wide best practices. Companies recognising that employees are their best asset should seek the status of ‘employer of choice’. How do you demonstrate this? Through setting a framework of policies and practices that develop employees to their fullest potential, regardless of race, language, gender, sexual orientations, etc. But it needs to be structured, with metrics to track, report, analyse and benchmark workplace equality.”
Where do you think progress needs to be made when it comes to ESG ratings?
“Environmental performance has been prioritised over the ‘S’ in ESG. This is because the risk climate change poses to business operations is more tangible and more heavily regulated. In contrast the social components of ESG – such as diversity and inclusion, health and certain workplace issues – require catch-up on the regulatory and legislation side.
Progress is being made. Let’s take a look at Singapore as an example. Only in 2014 were laws against sexual harassment introduced. New mandatory paternity benefits reflect shifting mindsets and cultural attitudes towards recognising parenting as a joint responsibility. In the corporate domain, there has been a push for more women on corporate boards. Companies are also increasingly called upon to disclose societal impact as well as environmental.
Ultimately, if we want to transform workplaces, then building in-house capacity to understand social indicators is good governance. It improves an organizations ability to interpret and use ESG data for risk management and capital allocation. And it allows this to occur as part of ‘business-as-usual’.”
Are there any stand-out ESG success stories you’d like to share?
“EDGE methodology is used by the Bloomberg Gender Equality Index, Equileap Indices and Dow Jones Sustainability Indices. These recognise companies who are taking concrete actions and I encourage you to look at the companies in Singapore that score highly in these indices.”