ESG (environmental, social and governance) may just be an esoteric term that’s being bantered about with no real action in T&T, says businessman John Hadad.
“The trend is a lot of talk and no action. ‘NATO,’ no action, talk only and we want to see a lot more,” he said following which he received an applause from the audience while speaking on a panel at the Institute of Chartered Accountants of T&T’s (ICATT) 13th Annual International Finance and Accounting Conference (2022) held at the Hyatt Regency this week.
“We are still building our business on borrowed money and we deal with every bank everywhere and we deal with suppliers abroad and locally and with customers in almost every continent and I have to say there are a few very disappointing things.
“No one has ever asked us where is your ESG policy, not even a local bank has said to us, ‘Do you have something in place, are you even speaking about it, what are you doing,” Hadad explained
This year’s theme was “Beyond Finance: Driving Sustainability, Reinforcing Trust.”
It was derived from a three-year strategic plan of ICATT which sought to address and provide a myriad of practical and theoretical solutions to the global, regional and local trends impacting the profession.
Hadad and his two brothers, Robert and Joseph, are founders of local distribution giant Hadco Ltd.
He said their suppliers, who are multinationals, have very strong ESG policies but when dealing with companies in “lesser developed countries” pertinent questions are not asked nor is there insistence on some of the things which need to be done within their own territories.
“So what makes that different? That is almost a breach of ESG. I want you to challenge us. I want you to tell us that you want us to behave in a particular way and not necessarily may be give us a timeline; work with us but at the end of the day ask the necessary questions,” Hadad said.
In sharing his own perspectives about what could be done on a wide scale to accelerate the adoption of ESG in this country Hadad advised there should be more focus on environmental protection.
And while he noted there are many things T&T “gets right” there still remains some level of illicit/non-compliant behaviour.
This, Hadad said, all comes right back to governance where there’s a lack of enforcement.
And according to Hadad if it is addressed it will also deal with social issues, adding that the private sector can play a critical role in this sphere.
In this vein, rather than the Government taking the lead on ESG, such a strategy should stay with the private sector.
“Companies have the power to be a social enterprise. We in the private sector control capital and generate jobs, and wealth and grow the pie for everyone. We have the power to internalise a social conscience and really embed it,” Hadad added.
He however admitted that some believe the ESG concept is not here to stay but stressed it’s all the more reason to push the agenda.
“We have to demand an audit. We have to demand accountability in that area to make it happen because let’s look at the results if it were not to happen,” he said.
Giving his take on how the ECG process can be advanced CEO of the Energy Chamber Dr Thackwray “Dax” Driver said it’s all about decision-making at a country level.
“It’s really taking this seriously and really understanding this change is happening around the energy transition and if we don’t make decisions we will be left behind,” Driver said.
He emphasised that speeding up decision-making, therefore, is absolutely crucial for T&T as a whole if the country is going to be able to deal with energy transitions.
According to Driver, the whole net-zero push will continue as commitments will continue by governments which will feed into how companies will operate.
“I’m seeing from the oil and gas and petrochemical industry in Trinidad a drive to reduce emissions,” Driver noted.
Also, in terms of operations, he said people are looking at ways to reduce this, citing that the NGC for example, has invested in satellite monitoring of its pipeline network.
Driver also noted that this country has a huge opportunity of having existing infrastructure in place which can be repurposed to create lower carbon fuels for international markets.
“But the opportunity doesn’t necessarily translate into action if you don’t make the decision,” Driver advised.
Tisha Marajh, group sustainability officer, Republic Bank who gave some insights into the financial market as it relates to ESG said this is a systematic way in which progressive businesses should view how they manage risks, maximise opportunity, deal with their moral compass and even how they treat with reputational risks.
Delving into the deeper trends for the financial and capital markets Marajh explained from the governance side there was “quite a lot of pressure” and not just internally but also from stakeholders.
“But because ESG is such a public admission of doing what is required hence there’s additional scrutiny and pressure will now grow to enhance the ESG skills.
“For example, in appointing C-Suite type officials to manage in an organisation. It’s not CSR (corporate social responsibility). It’s really a strategic imperative that you want to filter down,” Marajh further explained.
Additionally, she said investors and clients are also demanding better accountability and heightened sustainability, adding that one of the drivers of ESG is also the current generational shift-those who are “very much aware” of making decisions based on a better moral compass.
Delving into risks which Marajh said the management of this is key, she said from a governance side the sector is looking at ESG to minimise this, citing transparency and accountability for example as important elements.
And apart from ensuring the bank’s directors and board members are adequately trained and aware of business practices Marajh said the bank is also looking at its type of investments which can encourage more shift into the ESG transition.