Leading global companies discuss ESG integration

In the aftermath of typhoon Yagi, companies across Vietnam have rushed to provide much-needed relief to impacted communities through donations or on-site support campaigns. Such acts of corporate social responsibility are among the many ways a company can show its commitment to the greater good.

But how can businesses truly make environmental, social, and governance (ESG) principles a central part of their long-term corporate strategy? What can they do to harmonise profitability with sustainability goals in their daily operations?

The recent CEO Talks held by RMIT University addressed these questions and gave company leaders, academics, and students the opportunity to discuss the future of responsible business.

Themed ‘Profit and Purpose: Redefining Success in Tomorrow’s Business', the conference featured keynote speeches from top leaders of Schneider Electric Vietnam and Cambodia, Ericsson Vietnam, and McKinsey & Company Vietnam.

“Be an Impact company and bring everyone along”

As a global industrial technology leader of energy management and automation, Schneider Electric was named the world’s most sustainable company in 2024 by Time Magazine and Statista.

At CEO Talks, Mr Dong Mai Lam, Cluster President at Schneider Electric Vietnam and Cambodia, highlighted how five mega trends (New Global Equilibrium, Evolution of Wealth, Climate Change, Digitisation & Artificial Intelligence, and Energy Transition) are reshaping the world and aligning with Schneider Electric's ESG and sustainability strategies.

Mr Lam said, “Schneider Electric is as an Impact company, committed to empowering all to make the most of our energy and resources, leading in ESG and striving for net zero across its value chain.”

Impact companies operate based on two key principles. 

First, “do well to do good and vice versa”. This implies that sustainability is a source of performance and growth. At the same time, good business performance enables organisations to have the resources to make an environmental and social impact. 

Second, “bring everyone along”. Mr Lam explained: “In our corporation, we invite all our stakeholders – suppliers, customers, employees, shareholders – to be a part of our ESG and sustainability journey.” 

For example, as part of its climate commitments 2021-2025, Schneider Electric is committed to helping its customers save and avoid 800 million tons of CO2 emissions. The company also targets a 50 per cent reduction in the CO2 emissions from its top 1,000 suppliers’ operations. 

Mr Lam emphasised, “We cannot be sustainable alone. We need to do it together.”

“Map your business strategy to your ESG agenda”

Since publishing its first environmental report in 1993, Ericsson has been a pioneer of sustainability. The company aims to achieve net zero in its own operations by 2030 and in its supply chain by 2040. It is also active in bridging the digital divide through technology and connectivity, notably through its Connect to Learn program. 

According to Dr Rita Mokbel, CEO of Ericsson Vietnam, the ESG agenda should underpin the business strategy of every company. 

“For example, in pursuing the strategy of extending Ericsson’s leadership in 5G mobile networks, we are supporting the environmental agenda as 5G networks are more energy efficient than the previous generations. In Vietnam, our next-gen mobile networks can carry 10 times more traffic with up to 30 per cent less energy consumption. 

“Mobile networks support the social agenda with digital inclusion, helping more people to connect to the internet. A study has also estimated that for every 10 per cent increase in mobile broadband adoption, there is at least 0.8 per cent growth in GDP. So, the potential impact on society is huge,” Dr Mokbel said. 

After aligning ESG objectives with business strategy, the next step is to incorporate ESG reporting into performance reviews for leaders, in addition to enterprise-wide reports. This approach ensures that ESG considerations are embedded in decision-making and accountability across the organisation. 

“In addition to business goals, every leader in our organisation is measured on specific environmental, social and governance targets,” the CEO of Ericsson Vietnam shared.

“Take a holistic approach”

Mr Bruce Delteil, Managing Partner of strategy consulting firm McKinsey & Company Vietnam, said nowadays it is important to take a holistic view when defining business success. 

“When I started my consulting career a long time ago, every company would start with an ambition related to company size or profitability when crafting their strategies, ‘We want to be the largest, we want to be the most profitable’, and so on,” he said.

“A few years later, it was all about performance management and quantification and scorecards. Now, the definition of success has become more holistic for large companies but also for smaller organisations. It includes ESG, employee satisfaction, and other things.”

Mr Delteil highlighted that companies achieve superior performance by harmonising growth, profitability, and ESG. In fact, McKinsey & Company research found that ‘triple outperformers’ are more than twice as likely to grow their revenues by more than 10 per cent, than their peers.

Such outperformers tend to embed ESG deeply into their core strategy and ensure ESG priorities are an integral part of the organisational DNA. They continuously innovate their ESG-focused offerings and report on ESG transparently. Outperforming organisations also use mergers and acquisitions strategically to capture ESG growth.

“We are reinventing economic models and business models. The most exciting thing is that we know for a fact that it leads to value and that it is good for everyone,” Mr Delteil said.

On behalf of the organising team of CEO Talks, Associate Professor Burkhard Schrage, Associate Head of the Management Department at The Business School, RMIT Vietnam said, “The job of a CEO is becoming tougher today because there are so many different goals to balance. We hope that through CEO Talks, we can exchange practical insights and drive meaningful change in the corporate world.”

Story: Ngoc Hoang