02 February 2023
A Result Driven Approach To Sustainability
Companies can judge sustainability’s value adding propositions by four criteria: does it improve reputation, increase revenue, reduce costs or mitigte risk. This evaluation is a key starting point for Justin Grogan, whose results-driven approach reflects his experience leading the sustainability efforts of an ASX-listed company, and guides him in his new role as Senior Managing Director, Corporate Governance & Sustainability APAC for Morrow Sodali.
“My journey into the environmental, social and governance (ESG) space started around eight years ago, where I was asked to develop the sustainability function for CIMIC (formerly Leighton Holdings),’’ says Grogan. “We pretty much started from scratch, which meant choosing a reporting framework, developing a sustainability strategy and putting internal reporting structures in place.
“Along the way, I gained first-hand experience in everything from writing the Sustainability Report to completing the ESG surveys, dealing with the various ratings agencies and indices, integrating ESG into investor relations and presentations, and reporting on all that to the board and senior management.
“It’s a background that helps me to better understand where our clients are coming from and what they’re looking for, because I’ve ‘been there, done that’ and I’ve felt their pain.’’
To succeed, he believes sustainability initiatives require convincing stories about how they add value, which should be grounded in an understanding of what a business does and where its specific challenges lie.
“It might be about cutting costs and mitigating risk by changing out old halogen light bulbs for LEDs, which creates a brighter, safer workplace while reducing energy consumption and greenhouse gas emissions, as well as saving on energy expenses.
‘’Or it may be improving the efficiency of recruitment and retention by building a happier and more diverse workforce. Either way, there’s a clear narrative about how business performance is enhanced and the long-term interests of the company are supported.’’
Grogan says sustainability is currently an exciting space in the Asia-Pacific region, where a growing focus on the topic from international investors, ratings agencies and other stakeholders intersects with a diverse range of jurisdictions that vary widely in terms of their ESG maturity.
Servicing APAC from offices in Beijing, Hong Kong, Sydney, Melbourne, Seoul and Tokyo, Morrow Sodali has deep insights into the challenges facing company directors and executives across the region today.
“That means there’s a huge opportunity for us as a global business to offer world-standard services to the companies of the Asia-Pacific, and to help them along their journeys towards sustainability and standardisation,’’ says Grogan.
He also points to the recent change of government in Australia as a driver of demand for Morrow Sodali’s expertise in the region. ‘’With Labor now in charge in Canberra, we’re likely to see increasing regulation and more rapid progress on things such as mandatory reporting standards and carbon commitments,’’ he says. “Forward-thinking companies operating within Australia are beginning to formulate their responses now.’’
And with so much impetus for sustainability improvements being driven by global forces, businesses in the APAC region should realise that they won’t be immune to world events, he warns, citing the continuous evolution of Europe’s Sustainable Finance Disclosure Regulations and the EU Taxonomy for sustainable activities as an example.
“Some companies in our part of the world might still think that what happens over there doesn't necessarily affect them. But if you’re interacting with the equity or debt capital markets of Europe, for instance, developments in those markets are inevitably going to have an impact on you back here.
“The world of sustainability is becoming smaller and more integrated. Regulators are paying closer attention to reporting standards, and there’s steady progress towards consensus on internationally accepted norms. The rising tide lifts all boats, and a more stringent and consistent global approach is going to force change on to organisations everywhere whether they like it or not.’’
And as ever, unpredictable events from pandemics and wars to energy and food crises keep obliging companies to adapt to their environments. Unsurprisingly, Grogan views the recent spate of data-breach scandals in Australia through the lens of his evaluation quadrants of reputation, revenue, risk and cost.
“Those high-profile businesses affected by cyber-attacks have seen a massive amount of value destroyed through lost reputation, even ignoring the likely future impacts on foregone revenue and additional costs,’’ he says. “It would appear that cyber-security, data protection and privacy weren’t as prominent on corporate risk radars as they should have been. Companies should be constantly reviewing their risk management to navigate this unpredictable world, where change happens so fast.’’