Building trust through strategic ESG

• Author: Annabell Chartres
• Published date: 04 November 2021
• Publication title: New Zealand Herald, The (Auckland, New Zealand)

There is now an expectation that wherever your business is operating, your literal and metaphorical footprint should have a positive — or at the very least, neutral — impact on the wider community you operate in.

According to PwC’s Trust in US Business survey, the foundations of trust are built on data protection and cybersecurity, treating employees well, ethical business practices and admitting to mistakes. The research shows 49 per cent of consumers have started or increased their purchases from a company because they trust it and 44 per cent stopped buying from a company due to a lack of trust. Employee trust is also paramount, with 22 per cent saying they left a company because of trust issues and 19 per cent choosing to work at one because they trusted it highly.

This reflects the significant shift in societal expectations of businesses and organisations, who now need to implement environmental, social and governance (ESG) strategies to build trust with a wider group of stakeholders including customers, employees, investors, shareholders and, increasingly, media and communities.

Today’s business leaders are now judged on their authenticity in bringing this to life and their ability to consider the broader societal and environmental implications of how they operate and generate revenue.

Where is New Zealand in regard to this journey?

While sustainability and climate change are increasing areas of focus for New Zealand businesses, it’s still an evolving landscape with differing levels of maturity. We know the intention is there; PwC’s 2020 CEO Survey, showed that 70 per cent planned to increase long-term investment in sustainability and ESG initiatives over the following three years and 67 per cent had factored in climate change and environmental damage into their strategic risk management activities. However, without standard reporting frameworks and clearly defined targets, many organisations are left wondering where to start. The recently passed Climate-related Disclosures (CRD) legislation is the first of its kind for New Zealand and has the potential to make a significant contribution to New Zealand’s 2050 carbon neutral goal. The External Reporting Board is in the process of developing the reporting standards to support this legislation which will require entities to disclose according to the standard for accounting periods that start on or after 1 January 2023.

This legislation impacts New Zealand’s largest listed companies and financial...