The ESG agenda today is a boardroom staple. Since it exploded into the mainstream in the late 2010s driven by major global agreements, investor demand followed by new regulation, discussion and debate on the topic have been widely catalogued on public platforms and media.
However, despite the depth and breadth of coverage, many struggle to connect the principles or approach to the outcomes or tangible impact.
A previous study by ICDM found that 58% of Asean directors agree that sustainability, climate change and ESG agenda, metrics and targets are among the most challenging areas that require more training for their boards. Meanwhile, fewer than 20% of boards understand the link between their climate commitments and capital allocation decisions, according to PwC’s Corporate Directors Survey 2024.
These signals point to a common conclusion—the difficulty is not so much in recognising the importance of ESG, but in defining the correlation of the concepts to relevant, executable initiatives that will positively impact the organisation or business.
Part of the difficulty comes from operating in an environment motivated by the reward of achieving short-term goals.
While many companies claim to support sustainable growth, internal incentive structures often reinforce short-term pressures, and only about 30% of firms tie ESG to long-term incentive plans, according to another PwC report.
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