Setting climate targets without a consistent way to keep companies accountable will not work. This has been the main conclusion that both the EU and U.S. have drawn in recent years, leading to a slew of changes in corporate reporting. In the EU, policymakers have drawn up a new sustainability reporting framework called the Corporate Sustainability Reporting Directive (CSRD) with corresponding sustainability reporting requirements. In the U.S., the Securities and Exchange Commission (SEC) is expected to imminently strengthen its climate disclosure rule, while the California Assembly has recently passed legislation requiring all large companies to disclose scope 1, 2 and 3 greenhouse gas emissions.

This push for increased sustainability disclosures is putting ESG even higher on the priority list for executives. While in the EU, corporates have engaged with the specific requirements that will apply to their sector, several U.S. companies plan to outright sue the SEC for any changes made. More generally, many EU and U.S. companies have made low or zero-carbon pledges, but many don’t yet necessarily have a fully developed plan for how they will get there, making reporting much more complex. A situation that is exacerbated by the nascent state of ESG data collection.

Regardless of the political reception, companies must be aware of the specific changes underway and how the increased disclosures will open a much larger window into their sustainability communication, risk management, marketing and business strategy.

How companies meet this moment matters. Some may enter only into compliance mode and miss the opportunity to communicate effectively. Others may continue boldly without the right substance and step into a different kind of peril. But these do not harness the long-term value of ESG. What companies need now more than ever is the right ESG strategy, which includes a deliberate and unified trajectory for where the company wants to be and how it will get there. The fragmented and parochial approach at the country, function and even agency level has to evolve to a cohesive and connected outlook.

What does the Corporate Sustainability Reporting Directive mean for businesses?

The new CSRD will require all large and EU-listed companies to disclose detailed sustainability-related information. Corporates will have to report against comprehensive and sector-specific ESG impacts, risks and opportunities. This can include revenue linked to certain sectors (e.g., fossil fuels and chemical production) and remuneration policies linked to sustainability matters for board members.

Companies that have their headquarters outside of the EU, but with operations above a certain size in the EU (see thresholds below), will also be required to disclose against the EU’s standards. This could significantly alter the reporting practices of many U.S. companies, given the expected differences in level of detail required between the EU’s standards and the anticipated SEC rule.

The proposed SEC rule will require additional reporting on the governance and oversight processes of climate-related risks by the company board. It is also expected to require companies to disclose whether they have a climate transition plan, and if so, how they intend to reach the specific goals and targets.

How do the Corporate Sustainability Reporting Directive and U.S. climate disclosure frameworks compare?

While both disclosure frameworks will lead to an increased reporting burden for companies operating across the Atlantic, in comparing, it becomes evident that the global impact of the EU framework is much larger.

Even though the U.S. climate disclosure risk framework does apply to foreign registrants, the number of foreign companies that are registered with the SEC is rather small. In contrast, the new CSRD will apply to all third-country undertakings with a net turnover of €150 million in the EU, and either a “large” subsidiary or a branch that generates €40 million net turnover. This means that parent companies with a sufficiently large branch in the EU will be due to report under the CSRD in 2029, a significant extraterritorial reach of EU legislation.

Additionally, while the EU is actively coordinating with the International Sustainability Standards Board (ISSB) to ensure alignment between the EU’s extensive reporting framework and the International Financial Reporting Standards (IFRS) that are used in many other parts of the world, this seems to be less of a concern for the United States.

How can companies navigate the new sustainability and climate disclosures?

There is no doubt that the new reporting rules, especially those entering into force in the EU, will require many global corporates to significantly increase their data collection and disclose more details on their sustainability journey than ever before. This will open up corporates to significantly more scrutiny and judgment than before.

Yet this is only the beginning. The step change in disclosure requirements is opening a window onto what corporates can expect in the coming years on ESG.

FleishmanHillard’s global ESG advisory approach helps corporates to anticipate the shifting ESG sands in a coherent and connected way across policy, legal, brand, communications and reputation:

Preparation: helping organizations understand what is coming up and how to position themselves

• Global horizon scanner: identifying relevant sustainability policy trends and their legal implications.

• Green authenticity gap: analyzing the alignment between corporate positioning and stakeholder expectations.

Corporate narrative development: advising on globally resonant and locally relevant messages for corporates in any sector to help manage their reputation and positioning.

Execution: helping clients walk the walk

• Bringing ESG reports to life: assisting with the production of sustainability reports from concept to conclusion, underpinned by expert knowledge of different global rules and regulations.

• Strategic partnership building: advising on external profiles (civil society, ESG board representatives) to help boost corporate presence and positioning.

International event participation: identifying impactful speaking opportunities and advising on a corporate narrative that resonates with the latest ESG developments.

Strategic advisory: ongoing advice and support

Across PA, PR, reputation management and crisis communications based on in-depth expertise of global sustainability trends.

Ensuring a 360-degree approach to sustainability across all corporate functions is essential to a successful business strategy. The sustainability window is being cast wide open, and we can help provide organizations with the clearest perspective.  

Read our report, “EU and U.S. Sustainability Disclosure Requirements — a FleishmanHillard Perspective” for more.

Patrick Yu, GM, SVP and Senior Partner, FleishmanHillard Hong Kong

The global landscape for environmental, social and governance (ESG) reporting is in the midst of rapid transformation, driven by new standards and evolving regulations while pressed by broad-based demand for greater transparency and accountability, and all set against a backdrop of a growing number of investment decisions being shaped by ESG considerations.

Investors of all stripes (institutional, pension, private equity etc.) plus other stakeholders want clarity and consistency in the ESG audit process so they can make the correct investment decisions. Many already undergo due diligence on ESG credentials before putting money into funds, M&As or other company financings, but they want to use standardized measures as a foundation.

In our new report, The New World of ESG Compliance and Communications in Asia Pacific, we look at the new standards benchmarks for ESG Reporting from the International Sustainability Standards Board (ISSB). We also take a look at the readiness of companies and different jurisdictions to adopt them.

The stakes are high. Bloomberg Intelligence reports that ESG investable assets surpassed $35 trillion in 2020 and could reach $50 trillion by 2025 – that’s about one-third of projected assets under management globally. For fund managers and investors to be absolutely confident in the integrity of the ESG products they sell or buy is paramount.

In our Future of Asset Management in Asia report released earlier this year, we found that 80% of investors place a high value on strong ESG product offerings, especially those in mainland China (90%) and Hong Kong (80%).

Why effective ESG communication is essential

In June, the ISSB issued its first two standards that set a new global benchmark for such reporting. In parallel, regulators in the U.S., EU and Asia Pacific are moving ESG disclosures from voluntary to mandatory. The moves add up to rapid change and genuine progress in ESG reporting.

Essential to this are effective ESG-related communications – a true business imperative. Besides meeting compliance requirements, companies must craft compelling ESG narratives that satisfy diverse stakeholder expectations.

Many companies are in fact well underway in upgrading their ESG reporting processes. Almost all (99%) of S&P 500 companies voluntarily publish ESG reports in some form, while 85% of Hong Kong-listed companies disclose details of climate-related risks and mitigation measures. That said, disclosure is not uniform across jurisdictions, of which few require independent auditing of claims.

The two new ISSB standards cover general sustainability-related risks and opportunities, and climate-related disclosures. Both are voluntary and apply after Jan. 1, 2024, with implementation by jurisdictions in Asia Pacific and the EU likely by 2025.

In Asia, Hong Kong Exchanges and Clearing (HKEx) became one of the first in the world to announce plans to align with the new ISSB standards, which include new mandatory climate-related disclosures that supersede the current “comply or explain” system. In Singapore, the stock exchange is taking a phased approach to mandatory climate reporting, applying these rules in stages across different industry sectors.

ESG implications and next steps

It’s clear that investors increasingly seek sustainable investments in response to greater awareness of climate change, energy security and ethical finance. Fortuitously for them, higher ESG performance is also seen to correlate with lower risk and better long-term profitability.

So, what are the implications for business leaders in the Asia Pacific?

Regulatory changes and investor demand for new reporting standards mean sustainability information is rising to an equal footing with financial information.

Stricter reporting guidelines and investor scrutiny mean ESG is more integral to corporate communications strategies, so it is vital to develop a strong narrative.

Regulatory trickle-down will hit businesses caught up in the supply chain of companies that need to be ESG compliant, with the key sticking point being Scope 3 emissions.

Regulators worldwide are committed to interoperability and seek an alignment of ESG standards to ease the reporting burden for companies and aide investor decision making.

Companies doing business in Asia Pacific are rightly focused on compliance with ESG reporting standards and regulations as disclosure moves from voluntary to mandatory.

We recommend eight steps to prepare for ESG-driven transformation:

Begin now: ESG reporting is more and more urgent; companies have limited time to comply.

Explore sentiment: perception studies help identify investor sentiment and views on corporate ESG performance.

Build trust: assess your data for alignment with applicable mandatory and voluntary frameworks and identify gaps and actions.

Talk to investors: integrate ESG messaging for more active investor relations.

Tell compelling stories: refresh and update narratives and communications materials around ESG.

Inspire collaboration: use internal communications to improve staff knowledge of relevant ESG standards.

Plan for the worst: prepare for ESG-related risks such as a greenwashing accusation, non-compliance or action by consumer or shareholder activists.

Stay on track: monitor the development of global and local ESG standards.

Asia’s multiple jurisdictions create opportunities and challenges in ESG compliance and communications. Having a trusted advisor will help you navigate the complexity of the ESG landscape in the future.

A New Approach to the Employee Value Proposition

Gallup recently published its State of the Global Workplace 2023 Report and the results are grim. Engagement has dropped another 2% in the U.S., with employees continuing to check out at record levels.

In fact, according to Gallup, the majority of your employees (60%) are disengaged at work — with 18% actively disengaged.

This means most of your workforce is simply putting in a less than optimal effort to drive your business forward — and probably looking for another job. While nearly a fifth of your employees are actively doing harm by undercutting business goals and railing against leaders.

What’s going on?

The truth is companies leaned heavily on their employees during and after the pandemic – and employees, particularly Gen Z, are pushing back and reshaping their relationship with their employer.

They want more flexibility and autonomy. A focus on mental well-being. A better work-life balance. And to work for companies whose purpose and values align with theirs.

And while most organizations have recognized this fundamental shift, the empathy gap between workers and company leaders is now bigger than ever. As the WSJ put it, “rarely have bosses and workers been so at odds over so much.”

Rebuilding employee trust and engagement.

Organizations need to rebuild employee trust and engagement. Particularly with the 60% of employees who are disengaged. When you think about it, they’re your greatest opportunity for growth if you can re-engage them by clearly reinforcing and rearticulating your promise and aligning them behind it.

The most effective way to express that promise is through an Employee Value Proposition (EVP), conveying your unique offering as an employer (“the gets”), balanced with the expectations (“the gives”) for prospective and current talent.

However, the truth is EVPs have been around for a long time and frankly many of them are too transactional, vague and generic. More important, they often don’t authentically reflect the actual lived experience of your employees.

Which is why FleishmanHillard has taken a new approach.

A new approach to fulfilling your employee promise.

In our report “Unlock the Power of your EVP: Fulfilling Your Brand Promise to Talent,” we highlight how the conversation has shifted from compensation and benefits to one that reflects employees’ new expectations. An EVP that:

Clearly articulates what you value, and what you value in others, in an authentically human voice.

Explains how you provide employees with opportunities to grow.

Tells the story of who you are and what you stand for, highlighting your commitment to shared purpose.

Represents your vision for the candidate and employee experience – from entry to exit. 

Spells out your expectations of employees in creating a safe, caring and inclusive workplace.

Maps out how you’re empowering employees to make well-being a priority and find balance in their personal and professional lives.

The human deal.

This new approach to EVP calls for a human deal that recognizes employees as people, not just workers, and delivers on attributes that allow the integration of an individual’s employee experience and life experience. The nine elements to get right:

1. Well-being

Compensation and Benefits: Am I rewarded fairly? Do my benefits and compensation align with my skills and experience?

Work/Life Balance: Am I able to balance and integrate my personal and professional life? Am I able to perform my job wherever I am?

Safe and Efficient Workplace: Is the technology effective? Do I feel both physically and psychologically safe?

2. Growth

Recognition: Am I acknowledged and rewarded for good work?

Advancement: Do I have opportunities to learn, grow and advance my career?

Pride and Affiliation: Am I proud of my company? Can I grow as my company grows? Does it provide me with challenging and meaningful work on prestigious projects?

3. Belonging

Belonging: Do I feel a sense of belonging? Is my firm inclusive and diverse? Do I feel accepted?

Culture: Does my company have a positive, collaborative and inspiring workplace culture?

Purpose: Is my company committed to having a positive impact on society? Does my company’s purpose and values align with mine?

Of course, the work doesn’t end with mapping out the EVP itself. From top to bottom, leaders throughout the organization need to understand the company’s EVP strategy and the role they play in bringing it to life for their teams.

This requires thoughtful approaches that continue to inform, equip, align and engage leaders at all levels in making your EVP a lived experience, not just words on a page. Managers, as employees’ most sought-out and most trusted sources of information, are a particularly critical link in this chain.

With these considerations addressed, the EVP should and can be a strategic brand platform and an essential component of your corporate business strategy. Whether you’re just about to define your EVP or refresh an existing one, if done right, it can drive performance and profits, with noticeable improvements in important business metrics, such as turnover, absenteeism and accidents.

A strong EVP has the power to transform your disengaged workers into motivated and engaged employees aligned with your business priorities.

Paul Vosloo leads the Talent & Transformation team out of FleishmanHillard’s New York office.

In an artificial intelligence (AI) and machine-learning (ML) filled world, competition is fierce. The will to ethically utilize the problem-solving, efficiency-boosting and humanlike tech has found its way to the forefront of business strategies globally and the race to successfully integrate it to optimize operations is on.

We’re now seeing these intelligent machines emerge with immense impact on our daily lives. Its limitless potential and accessibility is empowering just about anyone to give the tech a go. Experts have high expectations for AI, with digital advances believed to range from personalized medical care to environmental sustainability by 2035 (PEW Research). These systems also come with risk and worry of what they could lead to — from misinformation to unemployment.

There’s plenty to unpack when it comes to AI and ML — the good, the bad and the ugly — and industry conferences and events are becoming a hub to talk tech. It’s a crowded landscape, and every AI and ML event is trying to stand out. But as you try to navigate the dense environment, there are a few key findings that can help make for an impactful event.

Plan for the Specific Needs of In-person and Virtual Media Attendees

The pandemic pushed us into a hybrid event model where a virtual component is now the expectation, no longer the exception. And though virtual events open the door to borderless media attendance, content must be engaging and thought provoking, especially when seemingly everyone is trying to talk about AI. We need to keep media tuned into the live stream. Remember: it’s easy to click to another browser and start multitasking. We want to prevent that from happening.

But lest we forget, in person events are back, and while it’s not as easy to walk out of an exhibit hall mid presentation as it is to exit a livestream, media have busy and ever-changing schedules. We want to remain on their calendars and need dynamic, immersive experiences to draw in their RSVPs. 

Through a strategic approach, events can be mutually beneficial for both reporters — whether onsite or from the comfort of their home office — and for your brand. So, when you’re in the early stages of planning, be sure to ask yourself a few key questions that can help shape that strategy: Is this session best served as a livestream or can I make it more engaging through an in-person session? Are there any partnerships that can be leveraged to enhance discussion or reach an expanded audience? What is the key differentiator of my AI event from others, and am I clearly articulating that in external communications?

Create a Unique Angle, Specific to Your Audience

We know the AI and ML event landscape is packed, and it’s becoming increasingly challenging to make a lasting impression. In fact, since November 2022, 98% of tech-centric events shifted their focus to AI and ML regardless of it being part of their strategy prior. But as events look to include AI as a unique driving factor in its core narrative, it ends up having the opposite affect — it eliminates differentiation.

So, what’s the solve? Organizations need to be strategic in their event approach and carve out space in an oversaturated AI environment. Recognizing that not all AI is created equal is key and making a point to understand your audience and shift the broader AI conversation to a targeted, niche dialog can make a big impact.

Develop Your Post-event Strategy Early

Pre-event traction is a given, post-event relevance is not. A post-event strategy is critical to maintain your audience once the hype dwindles and the event wraps. To bring some longevity to your event, know what stories to tell and where to tell them. To achieve this, map your narrative and internal stories to how the topic is being covered in the news, along with your target audience’s news consumption habits. With this data at hand, you can tell high-impact stories that not only break through to your audience but move them to action.

Focus on High-level Content and Engagement Over Celebrities

Despite what you’ve seen, A-list stars don’t drive event attendance or talkability. Their keynote or live performance won’t convince experts to register. The truth is, audience-centric content, thought-provoking conversations and networking opportunities with like-minded professionals will. These attendees are eager to collaborate and hear unique perspectives on various AI topics; and they were likely interested before you announced your headlining celebrity. Don’t use up your budget on a high-profile guest.

So, instead of an award-winning actor, bring in subject matter experts who will encourage ideas and innovation, or industry thought leaders who will initiate discussions around groundbreaking AI advances. If agenda content and the experience is tailored to your target audience, attendance will follow suit.

Navigating an inflating AI and ML event landscape will continue to be an uphill battle, so long as innovations continue and use-case breakthroughs emerge. There’s room for everyone and every AI event to have a seat at the table if you plan accordingly, carve out space in an inundated AI event environment, take a driven approach to reaching the right audience and bring in relevant thought leaders to encourage engaging conversations.

E-commerce, while hardly a nascent industry, has yet to meet peak maturation. Like most grumpy teens, it’s still communicating in monosyllabic grunts — but this won’t cut the mustard in a landscape dominated by rapidly evolving technologies, sustainability issues and ethics concerns. It’s time for e-commerce businesses to step up their comms strategies to cement their places as the future of retail. All in, e-commerce platforms should rethink their core purpose in a circular economy, one which is rooted in ethics and sustainability principles. It is critical for brands to not only listen to their consumers but to respond — whether that be through investment in technology to improve the customer experience, or to hang some big brand goals around sustainability. In a world where culture is currency, the ones that can’t keep pace with shifting demands and expectations won’t survive.

Is Retail Really Innovating?
Investment in technology went into hyper speed as brick-and-mortar stores shuttered in the face of COVID-19, and it shows no sign of slowing. Innovation and transformation that previously would have taken years, happened overnight. While this has helped spur the next generation of multichannel touchpoints, it presents its own problems. The everyday consumer has yet to truly understand the benefits technologies such as chatbots, analytics and AI can bring them. Consumers expect seamless interactions that ultimately benefit them; whether it’s personalized recommendations, loyalty programs or easier, more efficient check-out. The businesses that can articulate their brand promise will, ultimately, be the ones that win out.

E-commerce businesses need to be clear about how and why they are using technology to improve the customer experience; they need to think about what true innovation is. It could be argued that solutions are tacked on without any real thought, just a simple application of technology that already exists — we must question what the real revolution in e-commerce will be in this era of digital transformation.

Commitment Issues
This piecemeal approach to e-commerce needs an overhaul – one that is cemented in the commitment to become vital to consumers through far deeper levels of connection, both online and offline. Delivering on this vision requires companies to put e-commerce strategies at the center of their organizations so they can choreograph experiences that meet customers’ ever-rising expectations.

But this is no pipe dream. Some brands are generating vast amounts of revenue through a continued commitment to digital transformation and they’re doing it quickly. And it isn’t just legacy players doing so; newer entrants lack the burden of disparate, siloed systems and can, therefore, be much nimbler in attaining their goal of being true customer-led, digital-first platforms. However, many others continue to languish in an innovation no-man’s land for fear of cost, change and concerns — or more accurately, a combination of all three.

Know Your Consumers
The consumer experience is rapidly evolving from a transactional process focused simply on shopping and buying, to a model built on deep, enriching relationships at every step of the customer journey. Retailers and brands must become a key staple in their consumers’ lives. But first, they need to build a sophisticated understanding of the way consumers live, eat, shop, work and play — and use this knowledge to provide value in the right place, at the right time, via the right channels.

An experience-led consumer journey is no small feat. It will require a consumer-centric view of the entire business, from supply chain and operating model to content and marketing, all the while being propped up by technology ecosystem powered by real-time consumer data. With a marriage between infrastructure and brand, the e-commerce of tomorrow is ripe for the taking today.