The Australian Financial Review ESG Summit 2023 held in Australia during World Environment Day brought together industry leaders, policymakers, and experts to discuss various topics related to environmental, social, and governance issues.
Important announcements regarding greenwashing, compliance, and reporting are warning signs of the increasingly importance of corporate sustainability over the next few months and years.
Highlights of AFR ESG Summit 2023
1. Regulatory Scrutiny and Greenwashing
ASIC Chairman Joe Longo criticised companies that threaten to stop voluntary ESG disclosures, considering it a form of greenwashing. Longo, along with ACCC's Catriona Lowe, targeted overreach in greenwashing actions and emphasised the importance of authentic ESG practices.
2. Power Prices and The Role of Energy in ESGs
Concerns were raised about the potential rise in power prices if there is a lack of grassroots support for electricity transmission infrastructure. The build-out of poles and wires was seen as essential to avoid cost and schedule blowouts, power bill shocks, and missed targets.
3. Responsibility of Boards to all Stakeholders
Company directors were held accountable for the ESG mismatch and faced regulatory interest and threats of shareholder litigation. Boards must take responsibility for allowing management practices that do not align with ESG goals.
4. Embracing ESG for Future Markets
Martijn Wilder from Pollination urged Australia to embrace ESG practices and sustainability to identify export industries for the next four decades. This proactive approach was seen as crucial for defining future markets and ensuring sustainable growth.
5. The Positives of ESG investing
It was emphasised that ESG investing is not just a trendy movement but rather an embodiment of capitalism functioning as it should. The audience was reminded that millions of people support ESG principles and that sustainable investing aligns with long-term profitability.
6. Diversity and Corporate Governance
The focus on the "E" in ESG highlighted the need for better diversity and stronger corporate governance on boards. Kate Pounder, chief executive at the Tech Council of Australia, addresses the pressing need for stronger corporate governance practices and enhanced diversity in Australian SMEs. There is a critical role of corporate governance in navigating risks, fostering innovation, and contributing to a sustainable business ecosystem. By implementing robust governance frameworks and prioritising diversity within boardrooms, SMEs can build trust, enhance credibility, and tap into a broader talent pool, ultimately driving long-term success in the evolving landscape of ESG.
7. Challenges for CEOs on Driving Sustainable Growth
Climate change was discussed as a significant challenge for CEOs. The ESG Summit recognised the need for driving sustainable growth and highlighted the ESG priorities that businesses must address to navigate the complexities of a changing climate.
8. Collaboration with the Private Sector to Address ESG Challenges
NSW Energy Minister Penny Sharpe expressed the government's willingness to work with the private sector, emphasising that being against selling off public assets does not imply an anti-business stance. Collaboration between the government and businesses was encouraged to address ESG challenges effectively.
9. Energy Transition and Transmission
Energy Australia MD Mark Collette highlighted the importance of the energy transition, noting that the harder part lies in determining how and where to build the necessary transmission infrastructure. This transition is crucial for achieving sustainable energy goals.
10. Beyond Environmental Targets
Former Unilever chief Paul Polman stressed that having environmental targets alone is no longer sufficient. Consumer expectations are evolving rapidly, and companies must meet these demands while addressing broader ESG considerations.
11. Ethical Super Funds and Performance
The Australian Retirement Trust executive, Nicole Bradford, warned that ethical super funds may rank poorly in terms of performance because they often avoid investing in lucrative stocks associated with environmental concerns. The challenge lies in balancing sustainability with financial returns.
12. Corporate Positions on "The Voice"
The positions of various companies, including Orica, Dow Chemical, and IKEA, on "The Voice" (referring to a referendum) were discussed. While some companies like Westpac saw it as a leadership moment, others remained neutral, raising questions about their engagement with social issues.
What roles do SMEs have in the this transitions?
At NetNada we are excited for the role of climate champions and SMEs will play in this transition to an ESG lead economy. Moreover, we acknowledge the competitive advantage that early moves will have in winning clients that now have regulatory and compliance pressures.