Despite the planet’s critical health, enjoining companies to behave more sustainably remains a challenge. The Business Manual looks at the challenges in getting companies to care more about the planet.

With the planet already in crisis and climate change causing the situation to deteriorate at an even faster pace, the adoption of sustainable practices has become more crucial than ever in ensuring our very existence. Yet despite regulatory pressures and increased environmental awareness, sustainability still fails to gain significant attention on corporate board agendas.

Some stumbling blocks in getting companies to be more environmentally conscious are the lack of a deeper understanding of what sustainability means, the failure to integrate it into the organization’s operations, and prioritizing higher financial gains in the short-term over sustainability’s long-term benefits. That’s according to the non-profit organization Stewardship Asia Centre (SAC).

“The fact that the Philippines ranked 90th out of 180 countries in the Global Sustainable Competitiveness Report illustrates the need for more proactive measures. However, the impetus for effective change must originate from the board level,” explains Sunil Puri, Stewardship Asia’s Vice President of Research and Engagement.

Puri, along with SAC Assistant Manager Jane Ang, shared the results of their recent research and why sustainability should be a top priority in boardroom agendas:

Why do boards struggle to turn intentions into tangible sustainability efforts?

Our recent research study where we gathered data from over 700 board directors across 12 countries revealed several reasons why boards struggle to translate intentions into concrete sustainability actions:

• Intent is good, but not enough. Many boards with good intentions often struggle to translate them into action due to a lack of ability, which is influenced by factors such as board leadership, members’ knowledge, and their capability to weave sustainability into a broader business strategy.
• Boards with strong leadership and diverse expertise are better equipped to navigate sustainability complexities. The role of the chairperson is pivotal in driving sustainability- providing direction, ensuring goal alignment, and fostering a culture of psychological safety for productive discussions on sustainability.
• Board directors also need skills in compliance, reporting standards, and emerging sustainability trends to drive effective sustainability efforts. In today’s evolving landscape, “learning skills” are crucial to address new sustainability challenges and opportunities.
• Two-thirds of board directors believe integrating sustainability with business strategy is crucial for embedding it into core operations and decision making. Sustainability should not be a standalone initiative but integrated into every decision-making aspect. Understanding sustainability’s risks and opportunities helps align business and sustainability goals.

What barriers hinder boards from aligning goals with actionable sustainability strategies?

When asked, 73% of 637 board directors cited lack of information and knowledge as a major obstacle. Despite increased awareness, many directors lack a deep understanding of sustainability’s complexities and its impact on business operations. This knowledge gap hampers their grasp of sustainability’s role in long-term value creation and goal alignment. 

Additionally, 36% identified addressing diverse shareholder interests as a key challenge. Balancing shareholders who prioritize short-term returns with those advocating for social and environmental responsibility is tough.

How can boards pivot from risk management to steward leadership?

While risk management is essential, exemplary boards, known as steward leaders, see sustainability as both a risk and an opportunity. The WEF New Nature Economy Report II suggests that addressing sustainability challenges could unlock up to $10 trillion in business opportunities.

Boards with steward leadership integrate stewardship values into their organizational ethos. These values include interdependence, long-term vision, an ownership mentality, and creative resilience.

Why is now the time for a transformative shift in how boards prioritize sustainability?

According to the World Risk Index (WRI) 2023, the Philippines is the most disaster-prone country globally. As climate change intensifies, climate-related disasters will increase, making sustainability a priority for Philippine businesses. New sustainability regulations also demand urgent attention. From 2023, all publicly listed companies in the Philippines must comply with the Sustainability Reporting Guidelines, or risk losing their social license to operate. Focusing on sustainability ensures compliance and business continuity.

How would you rate the Philippines’ own compliance with sustainability mandates & requirements?

Like many Asian countries, the Philippines is embracing sustainability, complying with the SEC’s 2023 Sustainability Reporting Guidelines for publicly listed companies.

How does the Philippines fare versus its neighbors in compliance?

Compliance levels vary by regulatory environment and readiness. Boards in mature jurisdictions with strong regulatory frameworks show greater sustainability intent, while those in emerging markets face more challenges.

The Global Sustainable Competitiveness Report (2023) places the Philippines at the 50th percentile in the Sustainable Competitiveness Ranking, while countries like Japan, Australia, and Singapore are in the top quartile.

What do you see as the challenges and areas for growth for SAC’s sustainability efforts?

Stewardship Asia Centre (SAC) was set up 10 years ago to help businesses and government leaders, investors and individuals accelerate steward leadership action on environmental and social challenges through catalytic knowledge and advisory.

The increasing complexities of existential challenges make them exponentially harder to address as time progresses. SAC is on a mission to make an impact and spur more businesses to demonstrate steward leadership and find innovative, profitable solutions to threats against humanity.

What do you think are the repercussions of not stepping up sustainability efforts for the country?

According to Statista, in 2023, roughly 12.06 million people were affected by major natural events and disasters in the Philippines. The Philippines is also Southeast Asia’s most typhoon-prone country, hit by a yearly average of 20 typhoons.

In 2021, The Lancet study of 10,000 youth from 10 countries showed that the Philippines has the highest level of eco-anxiety or psychological distress due to the climate crisis.

If we do not step up sustainability efforts, the Philippines will continue to suffer the consequences of climate change. As global warming worsens, such climate-related disasters could even get more severe. It is crucial that we become stewards of sustainability, and the best time is now.