ESG is no longer just a commitment of the executive teams: WTW’s Rajul
The world has experienced an unprecedented number of climate catastrophes over the past year, including unexpected wildfires, a record-breaking heatwave, and rampant flooding. It is no longer enough for companies to review the impacts of these catastrophes on the sidelines; they should be actively working on mitigating challenges, preparing for an uncertain future, and aligning their organisational priorities to ESG goals.
In an interview with People Matters, Rajul Mathur, Head of Work and Rewards – India, WTW spoke about the key focus areas in the ESG mandate that companies need to prioritise. He also spoke about the leading best practices that companies are engaged in
1. Even as the global economy is going through a difficult phase, what should be some of the top business priorities for companies on ESG?
In the current economic climate, the focus of global companies on ESG metrics continues to be on the ‘S’ metrics, specifically on Inclusion & Diversity and Employee Health & Safety. Another significant area of focus amongst companies is around Climate and Environment, specifically around the reduction in greenhouse gas emissions and carbon footprint. That said, there is a difference in focus areas by industry; e.g. the Energy sector’s focus on ‘E’ metrics is almost twice as much as other industries, based on WTW’s latest ESG research.
2. Climate risk is one of the biggest business disruptors this year. Wildfires, record-breaking heat waves and floods have thrown normal life into flux. What are businesses doing well, and what are the challenges ahead?
WTW’s latest Climate research indicates that 81% of global companies think climate-related commitments are a significant part of their value proposition to employees, customers, investors, proxy advisors and other stakeholders. 40% of companies have already set carbon emission commitments, and 43% are developing climate strategies and objectives for the company. Companies that are ahead of the curve on climate priorities are focusing on the following:
- Appointing a Chief Environment/ ESG Officer and other climate/ ESG-specific teams or roles
- Incorporating climate and environment into their employee engagement practices
- Incorporating climate/ environment metrics into their executive incentives
- Focusing on ‘green’ benefits and HR policies
- Companies that have yet to start focusing on the above may want to include these in their priorities for 2023 and beyond. ESG is no longer a commitment restricted to executive teams but rather the entire organization and the employee value proposition for all employees.
As a nod to the above rising need, 43% of global companies have publicized their ESG goals and are actively tracking the response of employees through listening/ employee engagement initiatives. A few companies are also starting to/ are considering including ESG metrics in their larger employee incentive plans.
3. We’re seeing more talent aligned to the ESG focus on business. What kind of roles do you see emerging in this space? And who is likely to be accountable for ESG-related targets?
As mentioned above, companies which are ahead of the curve are already appointing Chief Environment/ ESG Officers and other climate/ ESG-specific teams or roles. However, these roles are meant to take point on climate/ ESG-specific initiatives of the company. The accountability often rests with the CEO and Board or sometimes with the entire Executive Committee.
4. At CoP26, a number of countries made climate commitments, especially net-zero goals; how do you see the corporate goals/ agenda in CoP27?
We are seeing global companies focus their environment-related corporate goals on specific long-term targets around reduction in greenhouse gas emissions, reduction in not just carbon footprint but along carbon intensity and waste reduction.