When it comes to environmental sustainability, Australia’s business leaders are facing growing pressure to act.
As stakeholders, boards and investors look to the ever-growing costs of inaction on climate change and the corresponding benefits of sustainability measures, business leaders are now at the forefront of decision-making on the transition to a greener, more sustainable economy.
New research from Bain & Company reveals that leaders across key sectors in Australia are unanimous in their expectation that sustainability will disrupt their industry, with 90 per cent citing a major focus on sustainability while pursuing better environmental, social and governance (ESG) performance.
One hundred per cent of business leaders interviewed agreed that inaction on sustainability presents risks to business and for two-thirds, this was their primary motivator for taking action. The other one third of leaders said they saw significant value-creation opportunities in sustainability.
For Suncorp’s Group Executive, People, Culture & Advocacy, Fiona Thompson, looking after the financial service company’s ESG strategy is front of mind. In recent years, she says attitudes to ESG have shifted within Suncorp, going from being viewed as a strategic risk, to a priority that has resonance and application across all teams.
“ESG is now seen as having the potential to drive growth and new opportunities for the organisation,” Thompson explains.
“We think success will come by continuing to understand the evolving needs of our stakeholders, having a clear purpose that drives our strategy and then developing business plans to achieve our objectives. This is the mindset we are taking to drive our progress towards having a fully embedded Net Zero Transition Plan.”
Thompson also notes it’s not just stakeholders and investors that are demanding action on ESG performance, it’s also employees. This assessment reflects the growing trend among employees, especially those from younger generations, to ensure their employers are playing a role in shaping a safe climate for future generations, as well as advancing a range of social issues.
Indeed, a recent poll from KPMG found one third of 18-24-year-olds had rejected a job offer based on a potential employer’s poor ESG record, with a massive 92 per cent of workers in that age bracket placing importance on the values and purpose of the organisation they work for.
“Collectively it’s something that all our stakeholders, customers, employees, investors, and the community expect of us,” Thompson shares on Suncorp’s ESG performance. “We know that if we don’t meet those expectations, they will vote with their feet and we won’t have a viable business left. That’s a good reason why we devote time each year to performing a Materiality Assessment – we want to ensure we have our fingers on the pulse of what matters most to our stakeholders. ”
“We also know younger people look at what their prospective employer stands for and the impact they have. Our employees want to know that they, and Suncorp, are making a difference every day to the customers and communities we serve.”
Bain & Company’s report also makes clear that business leaders are in overwhelming agreement that inaction on sustainability is risky for business. An example of this is that banks will no longer finance certain projects and tighten lending to those not meeting their sustainability plans. Meanwhile, shareholders are increasingly demanding a clear path to decarbonisation.
Thompson agrees, noting that from a risk mitigation perspective, a strong ESG strategy is key in future-proofing any business.
“If you look at it from a risk mindset, it’s why you need to participate in and move into this opportunity phase where it becomes not just something that you have to do, but something that you will benefit from, grow the business because of, and get new opportunities through,” she says.
Thompson also notes that the most successful business leaders in the ESG space are the ones leading with authenticity, empathy and adaptability. “A truly inclusive culture is critical to good business and governance,” she says
“Every leader needs to create an environment where diversity is embraced, people are empowered to share their views and diversity is celebrated.
“This allows our people to thrive but also ensures that we make the best decisions and continue to ‘lift the bar’ as an organisation.”