Sustainability isn’t just the right thing to do; it’s smart business: CEO of UN Global Compact Network Singapore

[SINGAPORE] “Sustainability is under… pressure right now, and we need to articulate the value of it during these challenging times,” said David Fogarty, chief executive officer of the United Nations Global Compact Network Singapore (UNGCNS).

UNGCNS is the Singapore chapter of what is described as “the world’s largest corporate sustainability initiative”. It helps businesses create meaningful impact locally, that can drive global change as well.

Fogarty added that the headwinds include economic pressures and the need to digitalise.

“Rising costs and the need to digitalise are forcing tough choices on many companies, (which often lead to) sustainability (being put) on the back burner. Yet these priorities can complement each other. Digital tools make sustainability more measurable, efficient and achievable.”

He noted that, in practice, small and medium-sized enterprises struggle to invest in digital systems that are energy-efficient; supply chains need better data to meet reporting standards; and developers in the built sector face higher costs adopting low-carbon materials or smart energy solutions.

“Hence, it is important for organisations such as UNGCNS to play a key role in conversations that help businesses adopt a sustainable agenda.”

There is clear evidence that sustainability delivers real business value.

According to UNGC research, companies with strong environmental, social and governance (ESG) practices achieve 50 per cent lower cost of capital, 88 per cent better operational performance, and 80 per cent stronger stock performance.

“Sustainability isn’t just the right thing to do; it’s smart business,” pointed out the 56-year-old. 

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“There may be some greenhushing going on now, and things may seem to have slowed. But I believe that more mature organisations have integrated ‘sustainability’ into their operations. Just because the term ESG is out from the current political point of view does not mean that organisations don’t think it is important. They know it is beneficial for them as, for example, having an engaged healthy workforce reduces turnover rates.”

The CEO added that while political issues are “fleeting”, the topic of sustainability is evergreen; he is thus looking to make UNGCNS its “solid home in an ever-changing climate”.

Singapore has also delayed mandatory climate-reporting requirements for most listed companies till 2030. Fogarty said that this may be good as it is “an opportunity to get ourselves ready. This time can be used to conduct training, articulate values and (handle pushbacks)”.

He also touched on the “social” aspect of ESG, noting that while it is the lesser-known counterpart of the “E” and “G”, it is equally, if not more, important.

While some matters, such as those related to supply chains, may be seen as linked to the “G” or “E”, they can overlap, he said. The conditions of workers in the supply chain, for example, can make these a social issue too.

He added that while the social component is harder to quantify as it deals with people and is hence more volatile, there are many standards of measurements that are being used by companies. The wide range can sometimes make it confusing for firms, when they have to pick one to follow.

“Part of our role is to be a lighthouse to guide companies to use a standardised metric. There are many frameworks; so we want to make sure the UNGCNS is a safe (place) for people to start their journey (from).”

Fogarty noted that governments alone cannot solve all the problems.

“It does take people and businesses to take collective action… Therefore, we want to be known as a collaborator, and if anyone wants to do something in the sustainability space, we are at the top of (their) mind, as UNGCNS’ strength is connectivity.”