What is unique about ERM’s contribution to the green transition?
Our expertise in sustainability solutions. We were among the first consulting firms in the world to recognize that sustainability would become a pressing business imperative in 1971 and have been in the business of sustainability since then. ERM has grown by 50% in the last two years, both in revenue and in size. We now have 8,000 people working in our business.
To continue this growing momentum, we have developed our unique business offerings on three fronts. This starts with consolidating our capacity to ensure that we are well-positioned to serve the needs of our clients within the framework of the circular economy. Secondly, given the depth and breath of the sustainability field, we are committed to seeking out fruitful partnerships to continually bolster our expertise across all facets of the sustainability landscape. The financial sector is increasingly driving the global transition to a green economy, and we have recently signed a joint venture agreement with one of the largest banks in Japan. Lastly, we are actively integrating digital technology into the services that we offer, as we believe that digitalization will be crucial in storing the vast amount of ESG related data and information being extracted from businesses globally.
Could you elaborate on the linkage between digitalization and ESG disclosure?
Should a business wish to consolidate ten operations at the same time, it is necessary to have the relevant data on hand to ensure that the auditor evaluating the company’s ESG performance immediately understands the impact of the consolidation.
Alternatively, if a company wishes to understand the impact of climate change on one of their assets around the world, a digital tool will enable them to register, read, and plan according to that information—for instance, one that can inform them of the impact of increased floodings on a physical asset just by feeding it the geographic coordinates.
What were the drivers for the accelerated growth ERM has undergone in the last two years?
In the next ten years, there will be an increase of 1.5º in the average global temperature. Governments in various parts of the world have responded in different ways by developing differing policies on decarbonization. In a similar vein, companies, also need to understand the economic benefits they might experience from following those policies. This sense of corporate urgency is what I see as the key driver of our current growth curve.
How do you compare the USA’s Inflation Reduction Act to the EU’s Green Deal?
The IRA is more of a carrot, whereas the EU Green Deal acts as more of a stick. Therefore, companies in Asia will respond quite differently to the two.
They must consider, for instance, the benefits of investing on home soil - which may offer competitive advantages when compared to having to pay a carbon tax when producing in, or exporting to, the EU. Ultimately, the majority of businesses in this scenario may decide to invest on home soil.
On the other hand, in the context of the IRA, you will see a significant outbound investment in the USA from Korean technology companies, such as producers of EV batteries. This is emphasized, incidentally, by the impoverished trade relations between China and the USA.
What are the specificities of ERM’s operations in the Asian region, and what do you hope to achieve in the near future?
Asia represents only 14% of ERM’s business globally. However, if you were to rank the top 50 corporations globally based on their level of innovation, many Asian companies would fall in this group – companies such as BYD, Huawei, and the like. However, these companies will not be as highly ranked based on ESG performance alone, entailing that the role and competitiveness of Asian companies in the transition to a global sustainable economy needs to be enhanced. So, we can safely say that ERM has a promising future in the region.
So, what would you say is the major challenge for ERM Asia?
The potential ERM client understands the demand for, or rather the customer pressure for enhanced ESG performance. However, they might not be entirely clear on the best approach forward. This is where our expertise comes in, although the approach might not always be straightforward as changes are usually more fundamental than they might appear to be. We have to help them understand they must carefully follow certain steps to achieve ESG operational standards; they cannot just jump from one to ten. Otherwise, we might run the risk of greenwashing, which we wish to avoid at all costs.
Could you give us some examples of current projects you are particularly proud of?
First and foremost, we take immense pride in our purpose to shape a sustainable future by working together with the world’s leading organizations.
Specific to Asia, we are proud to work closely with state-owned enterprises in the region to drive their decarbonization journeys. We have also had the privilege of working with the Hong Kong government in shaping their sustainability agenda over the past three decades. Finally, we established Asia Sustainability Movers, a sustainability network to facilitate ESG advocacy between businesses and governments.
