ESG isn’t a fad. It’s an effective framework to evaluate the sustainability and ethical impact of a company’s business practices that’s fast becoming mandatory in many markets. In APAC, some corporate stakeholders are now looking beyond the traditional profit metrics to judge organizations based on their performance against Environmental, Social, and Governance (ESG) measures.
Indicative of this shift is the fact that quite a few APAC governments have announced measures to combat climate change. Singapore1, Malaysia2, Thailand3 and Japan4all aim to be carbon neutral by 2050. Australia’s 2022 Climate Change Act doubles its 2030 emissions reduction target, and mandates Net Zero by 20505.As the region’s largest industrial economy, China6 expects to reach peak CO2 before 2030, and be carbon neutral by 2060.
The regulatory regimes behind these initiatives are getting sharper teeth. For example, recent legal opinions in Australia, Singapore, and Malaysia have found that company directors who fail to consider the impact of climate risks, can be held liable for breaching their statutory duty of care7.
Sustainability is emerging as a key concern for other stakeholders, including business partners, current and prospective employees, as well as consumers. With many of these stakeholders sitting outside the region (namely, global supply chains, international customers, and cross-border movement of talent), bridging the ESG gap is a critical consideration for companies in APAC. As the strategic focus shifts from post-COVID survival to ensuring long-term growth, conversations with Vialto clients suggest that rising stakeholder power could turn out to be a bigger driver of change than government regulation.
“A solid sustainability story is a key consideration for attracting, engaging, and retaining talent,” said James Clemence, Asia Pacific CEO at Vialto.
As an industry focused on the strategic movement of talent, global mobility professionals have an implicit understanding of sustainability principles. We know that effective people strategies and good global governance are critical factors in building a robust and successful business.
The global mobility industry is well-versed on the concept of building a great organization on the foundation of great people. We understand the importance of relationships, cross-cultural community, stakeholder connectivity, and empowerment. These social aspects of sustainability are at the heart of what we do in mobility. In addition, focus on good governance is an integral objective for global mobility teams—whether it is managing complex multi-stakeholder relationships, cross-border programs, or establishing and maintaining a licence to operate in a foreign location through trust and compliance.
And yet, despite mobility touching almost every part of the ESG picture, less than half (42%) of the webinar participants at Vialto’s APAC Mobility Week 2023 said their company “currently has sustainability measures in place within their travel or mobility program”.
Perhaps this is unsurprising given the APAC region has traditionally lagged behind Europe and North America in evaluating business performance through an ESG lens. Perhaps also, the fact that global mobility is typically considered under scope 3 emissions means that it is not a priority, at least from an environment perspective, for many senior executives. And so, it is left to global mobility teams to insert themselves into the ESG conversation, to pull up a chair, and to align their efforts with the broader corporate sustainability agenda.
This comes at a time when business travel and mobility are on the rise. A snapshot of global trip volumes on the Vialto myTrips platform showed a sevenfold increase from 2021 to 2023. According to a GBTA Business Travel Recovery Poll, travel managers expected the number of business trips to be even higher (78%) in 20238.
Tightening up travel substantially may not be the answer because companies tend to view business travel as an important factor in driving growth. According to research on global business travel by American Express, 85% of decision-makers believe that travel leads to better results in terms of increased revenue and higher profit9.
In any case, the goal isn’t to eliminate mobility, but to make it more sustainable and increase the return on investment. This is a balancing act that requires a rethink of the entire approach and an understanding of the levers that the mobility team has at their disposal.
Many HR and travel teams are finding ways to recast travel in a more climate-friendly way. Some companies are using dashboards and visualizations to make sense of their travel data, and to model the carbon footprint of their mobility program and the impact that policy decisions can have.
Relocation vendors are also being challenged to find solutions to increase efficiency, manage costs, and consider environmental impact. For instance, digital destination service providers are rolling out new offerings. Virtual home finding tours are becoming increasingly common and immersive, and producers of ubiquitous household goods are introducing sustainable packaging.
Sustainable contracting is a major focus. Procurement teams are placing more value on vendors who can demonstrate sustainable solutions. Employees are also placing more emphasis on their employer’s green agenda, pushing sustainability into the spotlight.
Policy benefits are also going under the microscope as companies review workforce expectations. For example, Core-Flex policies can give employees the option to reduce certain benefits—such as their shipping allowance—and, in return, purchase carbon credits with the money instead.
When it comes to sustainability, a lack of knowledge in how to translate ideas into practices that deliver day-to-day results is commonplace, especially in intensely people-centric pieces of the puzzle, such as mobility.
A sensible first step is to aim for progress, not perfection. For mobility professionals, a good jumping off point is to talk to other people and/or departments within the organization, and then align sustainability initiatives with the broader human resources strategy.
Mobility teams should also be using data already at their disposal to understand the environmental impact of their programs, and to set a baseline. Having a point of reference against which to measure progress and assess the impact of changes is critical. Establishing a methodology for measuring carbon impact that is aligned with other parts of the organization is also important, and there are frameworks and powerful tools available to facilitate this. Leading organizations are building incremental capacity and experience within their mobility teams to apply an ESG lens to decisions and policy-making. As with all aspects of business, data-driven decision-making is the starting point.
Ultimately, there is no sustainability quick fix. However, mobility teams can certainly facilitate progress by educating about the ESG impacts of mobility, providing information to travellers, and promoting the economic benefits within the enterprise.
Just as current challenges are different from those of decades ago, today’s organizations need to change with the times.
“Creating awareness of the environmental impact of corporate travel and employee mobility within your organization is the first step and the mobility teams play a significant role in this area. Starting small is better than not starting at all and finding a way to quantify and baseline the environmental impact of your mobility program is a great way to raise awareness before introducing initiatives to reduce that impact over time.” said Clemence.
So, act now and be the change you wish to see.
For a deeper discussion on this topic, please reach out to your usual Vialto Partners point of contact, or the following team members:
Hugh Cook
Partner
Phing Phing Lim
Partner
1.“Climate Action Tracker, Country Summary – Singapore”, November 21, 2022
2.“Malaysia needs to invest $375 bln in renewables to reach 2050 climate goals – report”, Reuters, March 9, 2023
3.“Climate Action Tracker, Country Summary – Thailand”, December 13, 2022
4.“Japan’s Roadmap to “Beyond-Zero” Carbon”, Ministry of Economy, Trade and Industry
5.“Net Zero”, Department of Climate Change, Energy, the Environment and Water, Australian Government
6.“China maps path to carbon peak, neutrality under new development philosophy”, The State Council The People’s Republic of China, October 24, 2021
7.“Company directors could be held liable and fined over unforeseen nature-related impacts and risks”, November 1, 2023
8.“GBTA Business Travel Recovery Poll Results”, Global Business Travel Association, October 6, 2022
9.“American Express and American Express Global Business Travel Release “Back To Blue Skies” Corporate Travel Report Surveying U.S. Businesses and Find Majority of Corporate Travel Decision Makers Believe More Remote Work Will Lead to More Business Travel”, AMEX Global Business Travel, May 20, 2021
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