Australian companies, multi-nationals, government entities and NFPs are all at a critical juncture in how they embrace Environment, Social and Governance as heightened regulation, heightened reputational risk and awareness resulting in public perception come under scrutiny when implementing ESG strategies into the workplace.
Driven by both investor demands and shifting societal values over the past few years, both social awareness and a deeper understanding of ESG has grown exponentially and organisations are quickly having to embrace it as a core part of their business strategy, and as a key driver of long-term success.
It’s a shift in thinking across the domestic corporate sector that our Partner Jonathan Harper, who specialises in Risk Management, Environment, Social and Governance, and Sustainability, says is long overdue.
“Companies now recognise that the issues that ESG address are real and present significant investor, socioeconomic, cultural, operational and by extension financial risk and opportunity,” says Jonathan, “addressing them is now mandatory for every organisation.”
“In a country like Australia which faces such extreme climate impact, we’ve already seen how major climate events can impact financial institutions' long-term exposure to those regions through stranded assets, credit loss portfolios and the same can be said in insurance premiums and investment strategies in superannuation”.
Two years ago the Australian Prudential Regulation Authority (APRA) appointed a Head of Climate Risk where we are now seeing in Australia, as we did in the UK, investment management groups using the role of the proxy advisor to boards and executive teams to invest in their ESG strategy and appoint ESG champions; both at board and within the executive leadership teams, thus integrating ESG information into their investment decision making processes.
As the technology evolution continues to gather pace, organisations are now connecting AI Governance into their organisational governance strategies and this is particularly relevant to ESG.
To address environmental issues, AI, if adopted organisationally would be able to track data linked to biodiversity loss, renewable energy green building and reduced waste. Connecting the dots between an anti-prejudice approach using AI will lead to significant improvements in anti-discrimination, consumer protection, privacy and data use and duty of care/negligence. Linking this to the “S” in ESG and notable uplift in addressing diversity, inclusion, race, gender, human rights/modern slavery, supply chains, bullying/harassment, cyber and data privacy. AI can also effectively govern - the “G” in ESG - notably enhancing risk mitigation strategies, anti-bribery/corruption, board independence, diversity and decision making.
“But robust ESG practices not only contribute to a sustainable future but a range of key business benefits beyond profit margins,” says Jonathan, “they enhance brand reputation, foster deeper customer loyalty, help attract talented and committed executives, and drive financial performance.”
A seismic change
This shift requires leaders who not only understand these principles but can also champion and implement them effectively and can hit targets set by boards whilst effectively managing the companies reputational risk associated with ESG and in particular cynicism attributed to activities such as corporate greenwashing and are they really living and breathing their culture and values.
This requires high levels of authenticity, transparency for all ESG functions and strategies.
“Businesses are starting to ask themselves if they are living their ESG ethos,” says Jonathan, “shareholders and their customers are questioning organisations more and more - who are they lending to and are they being truthful about their carbon footprint?”
Are we hiring and breathing what we say?
Many companies are asking how they ensure ESG is integrated across the organisation and where do they find experienced ESG executives.
“Creating a positive culture means all senior leaders need to be responsible for ESG. It impacts every silo of your business,” says Jonathon.
A major challenge Australian business leaders are facing is the shortage of experienced ESG leaders across all sectors. A lot of experienced leaders have had to effectively rebadge themselves as ESG champions or leaders within the business whilst learning on the job. The younger generation of professionals are more materially skilled in ESG, but they do not have the executive presence to lead significant transformational change nor do they necessarily have the experience of working across Investor Relations, People and Culture, the CRO Office and the CFO Office.
“In Australia, we are around 12 to 18 months behind the leading overseas markets like Holland, France, the United Kingdom and the United States,” says Jonathan. This has led Omera Partners to ask what do future ESG leaders look like, and how do we uncover them?
We believe talented executives with experience in culture, investor relations, risk and transformational change can, with the right level of support, transition into exceptional ESG executives.
At C-suite and board level we target expertise in socioeconomic governance, climate risk and investment management coupled with the academic sector where specialists across a broad range of disciplines can bring an unrivalled depth of knowledge of ESG to the boardroom.
We look to advise and mentor younger executives to accept positions on board advisory committees to give them the experience to then take the next step in their careers.
Government entities are also a rich source of ESG talent as this sector has been ahead of the curve compared to many corporate sector companies.
ESG is reshaping the future of Australian business. To stay competitive and resilient, companies must embrace ESG principles and integrate them into their DNA. Omera Partners understands that building senior leadership teams aligned with ESG obligations is not just a choice; it's a strategic imperative.
Under Jonathan’s guidance as Partner, Omera Partners is uniquely positioned to support organisations both domestically and across APAC with ESG requirements. In this transformative age, Omera Partners is not merely in the business of executive search; we are committed to building a sustainable and successful future for Australian organisations and the economy.