Nearly half of the respondents (47%) said they have or will soon deploy listening strategies to better engage with their employees, while more than one in three have created a new executive role to drive their ESG strategy.
With the world facing a slew of challenges in 2020 - one of the biggest being the global pandemic that brought the world to a standstill, it comes as no surprise that companies around the globe would be re-looking their priorities.
In fact, in a recent survey of boards of directors by Willis Towers Watson, many revealed that they are looking to either maintain or accelerate changes to their companies' environmental, social and governance (ESG) priorities. In Asia Pacific for instance, 70% of respondents said they are planning to change how they use ESG with their executive incentive plans over the next three years, while 69% plan to introduce ESG measures into their long-term incentive plans over the next three years.
At the same time, 61% plan to do the same with their annual incentive plans; and close to one-third plan to raise the prominence of environmental (29%), social/employee (29%) and governance (31%) measures in their incentive plans in 2021.
In line with that, the survey further revealed the key challenges companies are facing with using ESG metrics in their incentive plans, including target setting (46%), performance measure identification (37%), and performance measure definition (34%).
Employers are putting on their ESG lens: Listening strategies, new executive roles, and more
Employers are also taking various measures to review their workforces through an ESG lens. In particular, close to half of the respondents (47%) said they have or will soon deploy listening strategies to better engage with their employees, while more than one in three have created a new executive role to drive their ESG strategy.
Additionally, half of these respondents have identified new positions in their organisations that can help achieve their ESG strategy, while the same number are also either planning or considering identifying new skills and knowledge to help the organisations achieve their ESG strategy in the future.
While the above is so, respondents are not forgetting another key aspect - culture. According to the survey, nearly half of respondents are either planning to review their culture to ensure ESG is embedded throughout their organisations or are considering doing so in the near future. At the same time, approximately one-third of respondents are planning to add oversight of broad-based total rewards and employee wellbeing to the compensation committee’s remit within the next three years.
Overall, while most companies are developing ESG implementation plans (84%) or have identified ESG priorities (82%), less than half (48%) have incorporated ESG plans into all aspects of their businesses - strategy, operations, and products and services offerings, indicating that companies are on different parts of their ESG journey. More than half (55%) are accelerating their ESG priorities and timing, and four in five (81%) believe ESG is a key contributor to stronger financial performance.
Commenting on the above, Trey Davis, Executive Compensation Leader, Asia Pacific Willis Towers Watson, said: "In Asia Pacific, integrating ESG metrics into incentive plans is less common and less advanced than in other parts of the world.
"Although companies are revising their use of ESG measures to support their executive pay programmes, it appears more work needs to be done. Some countries such as Singapore and Australia have already come a long way and can serve as models for other markets. Others like Japan are in close pursuit."
About the survey
The 2020 ESG Survey of Board Members and Senior Executives was conducted in September and October 2020 with participation from non-executive and executive directors, and non-board member management executives at 168 organisations, of which 38% were from Asia Pacific and the rest from North America, Europe, Africa and the Middle East. The respondents employ a total of 2.2mn workers.
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