Unboxing the environmental, social, and corporate governance pressures on employers

COVID-19 has resulted in undeniable business volatility and a broader disequilibrium in Asia-Pacific Region (APAC) markets. From the ground, this has been highly visible through its effect on the labour market, placing significant pressure on businesses and their approach to Environmental, Social and Corporate Governance (ESG). According to PwC, “Employees across Asia-Pacific are newly empowered, have greater expectations of their employers and talent is on the move to a degree not seen before.”

So, with this accelerating pressure and a high degree of competition in the job market, what does this mean for businesses?

Shifting your business’s approach to ESG is now more important than ever; it’s no longer just something employers can check off a long list – it’s now considered a genuine source of value that businesses use to differentiate themselves and potential employees use to measure future employers.

1. Environment

The conversation has ramped up amongst APAC business leaders concerning sustainability and the achievement of net-zero targets. After APAC countries outperformed their global counterparts in 2021 in the reduction of their carbon intensity, the pressure has been on businesses to continue to engage proactively in managing their own environmental impact.

While employees are certainly holding employers accountable for their environmental ethics, so too are consumers, investors, regulators, and the broader public, who want to see that environmental targets are being met with meaningful actions. This means that businesses need to practice transparency to build the trust of their stakeholders. To this end, ‘greenwashing’ will no longer fly as the Australian Competition and Consumer Commission (ACCC) cracks down on misleading sustainability claims, marketing copy (persuasive content), and packaging, which may result in legal penalties in some cases. Similarly, consumers continue to scrutinise ostensibly ‘sustainable’ brands, resulting in companies that are not, in fact, sustainable, facing real reputational damage.

2. Social

The COVID-19 pandemic raised general awareness and recognition of the importance of mental health in the workplace. However, challenges persist in this area. Increasingly high-stress levels, long working hours, lack of work-life balance, and inadequate support systems continue to put pressure on employee well-being and productivity. Employers remain faced with significant pressure to prioritise mental health initiatives, provide resources, and foster a supportive work environment to remain competitive. Some businesses are addressing the problem with strategies including monitoring excessive workloads, creating reasonable expectations, promoting realistic deadlines, and advocating actively for a workplace culture that values and supports mental health.

Although the interconnectedness of businesses has dramatically increased over recent years, many workplaces continue to struggle with achieving true diversity and inclusion. Efforts to create equitable environments and ensure equal opportunities for all employees are necessary for businesses to retain and attract talent. Tactics that employers may adopt to assist with this include ensuring diverse representation across all levels of the organisation (including leadership), implementing an Equal Opportunity policy, and conducting a review to identify and target any discriminatory practices that may exist in recruitment, hiring, and promotion processes within the business.

3. Corporate governance

Greater social awareness and regulation has seen businesses increasingly being held accountable for acts of modern slavery. Practices, including forced and child labour, underpayment of migrant workers, and the running of illegitimate, unpaid internships have become the topic of social and legal scrutiny. Employers are also increasingly required to grapple with whistle-blower protections and implement clear codes of conduct and policies that genuinely reflect their ethical standards and practices when accusations are levelled.

Separately, transparency has become a valued part of decision-making and ethical leadership in business. While employers bring themselves up to speed with their ever-increasing workplace obligations, the expectation is that they will continue to clearly communicate company values, policies, and procedures to their employees with integrity and honesty. By meeting these expectations, businesses stand to build a culture of ethical behaviour, enhance their governance practices, and mitigate risks but also strengthen reputation, stakeholder trust, and overall workplace social responsibility.

Tackling the pressure

In short, organisations and executives who recognise the challenges of ESG but who lead by example, uphold ethical standards, and hold themselves accountable to important issues will emerge as role models in the current landscape. This requires the formulation of a business strategy for the best chance of responding effectively to current pressures and achieving several broad-sweeping benefits.

About our authors

Laure-Elise (Laure) Kenworthy is a Senior Workplace Relations Consultant based at our Sydney office. In her role, Laure provides advice to a variety of clients via the HR Advice Line. She is currently undertaking a Masters of Labour Law and is passionate about working with people to achieve great results.