Australia has emerged as one of the top countries in the Asia-Pacific region leading in implementing environmental, social and governance (ESG) measures, the latest WTW report for 2023 showed. 

According to the study, at least 86% of the companies surveyed in Australia have embedded ESG measures in their core strategy, second only to Singapore’s 93%. After Singapore and Australia, Japan comes third in overall ESG implementation in APAC with 72%.

The overall average of ESG implementation across APAC is at 77%, the study showed. This represents an increase of 14 percentage points from 2022’s 63%. 

The WTW report is based on the disclosure of metrics by 1,146 across the region. Of this number, 100 companies came from Australia, another 100 from Japan, 30 from Singapore, 11 from Hong Kong, 9 from India, 8 from Malaysia, and 7 from China.

READ MORE | Why APAC companies embrace ESG-linked executive incentives

ESG represents a set of criteria that businesses use to evaluate a company's performance and broader impact on the planet, society, and internal governance. Most of the ESG efforts in APAC are focused on the social metric, which includes people and HR; diversity, equity and inclusion; employee health and safety, and customer service.

Despite the increasing adoption of ESG metrics across the region, WTW found at least two-thirds of all organisations surveyed in APAC include these measures in their short-term incentive plans. 

“Increasingly, there is more pressure on ESG-related disclosures and progressive sustainability practices across markets in APAC. More and more companies are incorporating executive incentives with ESG measures,” Shai Ganu, WTW's managing director and global practice leader, said. 

READ MORE | How HR can add value to ESG initiatives

Why ESG matters in Australia

Embracing ESG practices is a strategic imperative for companies seeking to mitigate environmental risks. With growing concerns about climate change, consumers, investors, and regulators are increasingly scrutinising businesses' ecological footprints. 

Companies that proactively address environmental challenges not only contribute to global sustainability goals but also position themselves as responsible stewards of the planet, which resonates with environmentally conscious consumers and investors.

The social component of ESG underscores the importance of fostering positive relationships with the people. Companies that prioritise diversity, equity, and inclusion, while also addressing social issues, are better equipped to navigate the complexities of today's world.

A socially responsible approach not only enhances a company's reputation but also helps in attracting top talent and fostering a positive corporate culture.

Last but not least, effective governance is the backbone of any successful business. ESG principles emphasise the need for robust governance structures that prioritise transparency, accountability, and ethical decision-making. Companies with strong governance practices are better equipped to navigate challenges, build trust among stakeholders, and ensure the long-term viability.