Cyber security key ESG theme in 2022

Cyber security has emerged as the key environmental, social, governance (ESG) theme in 2022, followed by greenhouse gas (GHG) emissions and diversity, according to the Perennial Better Future Survey.

The study also confirmed that ESG was still important for the Australian Securities Exchange (ASX)-listed companies as 78% of respondents said their strategies specifically referenced ESG and sustainability.

Although governance and modern slavery still ranked high among the ESG considerations, cyber security moved to the top spot in 2022 from its fourth position in 2021 and was consistent across larger and smaller companies.

Interestingly, another area of focus was on reconciliation as the survey found that although only 24% of companies surveyed had launched a Reconciliation Action Plan (RAP), an additional 25% were planning to in the next 18 months.

Damian Cottier, Co-Head of ESG and Portfolio Manager on the Perennial Better Future Trust said the survey sought to gaze into the collective mind of corporate Australia to understand how deeply it is concerned with ESG and Sustainability.

“We had a really broad range of companies participate – from the major banks to microcap stocks.  The outcomes are fascinating on a whole range of issues, and it is intriguing to see how thinking has changed in each of the four years since the survey was first conducted.”

Overall, the survey, encompassing 55 ASX-listed companies from a cross section of market cap sizes and industry sectors, revealed strong progress on ESG initiatives, despite a challenging macro environment, including tighter monetary policy, inflationary pressures and rising energy prices.

It covered a range of areas including:

• Who is responsible for ESG and how are companies resourced to grapple with ESG and sustainability issues;
• The extent to which ESG and sustainability outcomes are embedded in corporate remuneration;
• What are companies measuring and targeting in relation to greenhouse gases and other ESG-related metrics;
• How companies engage with investors on ESG and do they think it is worthwhile?
• How are companies thinking about Reconciliation?
• What are companies doing to address Modern Slavery risks?
• How are companies thinking about gender diversity and the inhibitors to greater diversity.

“We were also pleased with the sustainability progress of smaller companies. When asked whether they have experienced positive business outcomes as a result of focussing on ESG & Sustainability 78% of smaller companies agreed which was a higher percentage than larger companies,” co-head of ESG at the Perennial Better Future Trust, Emilie O’Neill, said.

“This is encouraging and suggests smaller companies are seeing the importance of improving ESG performance where smaller companies have historically lagged,” Cottier added.