FTI Consulting brings its ESG Compass offering to Asia

11 August 2020 Consultancy.asia

Following its global launch, FTI Consulting has brought its ESG Compass service to Asia. The proposition helps companies better manage their environmental, social and governance footprint.

The launch comes at a time of growing awareness for environmental, social and governance (ESG) considerations. On the back of the United Nation’s adoption of the Sustainable Development Goals (SDGs) and its Principles for Responsible Investment (PRI), which outlines six key ESG principles in investment management, ESG and sustainability issues have in the past years been gaining relevance in the business sphere.

According to a recent study by FTI Consulting, 28% of global institutional investors surveyed now believe listed companies are under ‘extreme pressure’ to improve their ESG credentials, and 88% agree that ‘there should be more reporting on the actual impact of their activities’. 

Meanwhile, the Covid-19 crisis has escalated and accelerated a shift in understanding of ESG as a driver of business success and innovation, according to Tom Evrard, a Senior Managing Director at FTI Consulting in Singapore. “The trend is driven by increasing expectations of investors, customers and broader society backed by regulatory reforms that are sweeping the globe,” he said.

FTI Consulting’s ESG Compass offering

FTI Consulting has been working with corporates and investors on ESG topics for years, across a number of disciplines including investor relations, financial communications, strategy & policy, capital markets and sustainability operations. The consulting firm has now bundled its expertise into a single offering, ESG Compass, with the aim of providing clients a holistic view on the matter underpinned by cutting-edge data driven insights. 

ESG Compass

“The ESG Compass offers clients a proven, distinct, and highly tailored approach to bolstering their ESG program, safeguarding performance and reputation. It helps them take a data-driven approach to enhancing their ESG strategy, can ensure risks are properly mitigated and opportunities are seized, and pave the way for longer-term sustainability,” said Mark McCall, a Senior Managing Director at FTI Consulting based in New York.

The platform works as follows. For each of the main ESG criteria, ESG Compass consolidates performance data from hundreds of data points, providing capability scores across nine key categories (see figure below). The gaps between actual scores and target levels can subsequently be used to shape an ESG roadmap. A comparison of performance to peers and best practices sheds light on potential improvement areas. 

Caroline Das Monfrais, a Senior Managing Director at FTI Consulting in London, said: “ESG Compass can be used for the planning of disclosure and reporting for financial and non-financial information. It can also be complementary to a set of associated activities, including public affairs, employee and stakeholder engagement and corporate communications, from strategy design to crisis response.”

Environmental Sustainability, Social Responsibility, Corporate Governance

Asia

While rolled out globally by the firm’s Strategic Communications division, Asia is seen as a region of particular potential given its socio-economic importance on the global stage, but also because of the region’s lagging performance.

Evrard explained, “Some of the largest social risks for business are in the region, including forced labour, human trafficking and human rights, much of it centred on the large migrant workforce through Asia. Add to this that historically, investor focus on ESG has been lower in Asia than in other parts of the world.” 

“Many internationally focused Asia Pacific companies lag behind rising expectations ESG, domestically. Especially in their more Western oriented overseas markets, Asian-origin multinationals “are having to adapt to new national policies and agreements and mandatory reporting and develop a strategic ESG approach integrated with their business.”

Demonstrating this, a study by EY found that a growing band of executives believe ESG management should go beyond just compliance as it can be a driver of business growth, while a 2019 study by Alvarez & Marsal found that poor ESG performers are more likely to be targeted by stakeholders groups and activist investors 

FTI Consulting’s ESG Compass diagnostic is particularly relevant for “highly regulated companies across sectors”, investor companies and communities, and private equity groups, said Evrard.