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ESG and Sustainability

How organizations manage environmental, social and governance (ESG) and sustainability issues and incorporate them into all they do has become a critical, board-level issue – and opportunity.

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With more than half of the S&P 500 incorporating ESG metrics into incentives plans at the start of 2021, ESG has the attention of a broad group of stakeholders. Accordingly, organizations’ approach to ESG must address the needs of a wide range of interests.

Given the interconnected nature of the numerous ESG imperatives, an effective strategy requires an enterprise-wide, overarching view. Willis Towers Watson’s unique perspective and expertise across people, risk and capital help organizations think differently about their ESG and sustainability goals – creating a comprehensive strategy that demonstrates purpose, drives action and creates impact across multiple stakeholder groups. And with a significant body of research devoted to ESG, we bring a comprehensive understanding and appreciation of the complexity around ESG challenges as well as a broad range of practical experience and solutions.

People, risk and capital are the essential links that connect all dimensions of ESG and sustainability. People, for example, are at the heart of climate and resilience, wellbeing, diversity, equity and inclusion (DEI), and sustainability. Those that can engage their people in advancing their DEI and climate goals, while supporting employee wellbeing and resilience are more successful than companies that don’t. Risk management captures and measures how ESG pervades an organization’s operations as well as its potential costs of action and inaction. And capital not only encompasses sustainable investing, but also investment in programs – whether to support employees and communities or to mitigate risk.

ESG is the means through which we help organizations to achieve their purpose and sustainable success.”

Carl Hess | President of Willis Towers Watson

An organization that meets ESG commitments starts by understanding how people, risk and capital affect each of its stakeholder groups. For example, they know their employees will look to them to not only support and invest in their wellbeing and Total Rewards – fair pay, flexible work arrangements, health and benefits programs, to name just a few – but also to demonstrate organizational commitment to the core tenets of ESG: protecting the environment, enhancing social impact and diversity and inclusion, investing responsibly and ensuring effective corporate governance.

Organizations at the forefront of ESG appreciate that their investors, who recognize the importance of attracting top talent, will support those with the processes, talent and technology to run capital efficient businesses as well as focus on social and environmental issues. They also see the need to manage the short-term risks associated with climate change – more severe weather, increased supply-chain risks due to more frequent and intense natural catastrophes as well as their carbon footprints and, in some industries, the long-term sustainability of their business models.

And while environmental and climate exposures are typically the first risks that come to mind in terms of ESG, risk management extends into the social and governance categories as well. Essentially, effective risk management – and its impact on people and capital – is also part of good ESG management. Similarly, sustainable investment transcends ESG categories while also incorporating dimensions of people, risk and capital.

Without a multifaceted yet integrated approach to ESG, organizations are likely to fall short of their commitments and face consequences on numerous fronts: shareholder value, ability to attract and retain top talent, and loss of brand equity, among others.

The Willis Towers Watson perspective combines three broad lenses

Willis Towers Watson's own commitment to ESG starts with our purpose — clarity and confidence today for a sustainable tomorrow — and our values: client focus, teamwork, respect, excellence and integrity. Through adherence to those principals, we ensure that we live ESG at the enterprise level and can advise on ESG issues with authority and confidence. We understand how vast, complex and dynamic ESG challenges and opportunities can be, and we offer a wide range of services to address the numerous facets of sustainability, each incorporating the lenses of people, risk and capital. We also help businesses to expand their commitment to ESG beyond their own organizations, encompassing visibility into the ESG-related policies of suppliers and partners and supporting and influencing their efforts toward the positive change.

Whether developing a holistic, enterprise-level strategy, executing tactical ESG-related programs, or helping to connect sustainability goals with daily efforts, we help clients address ESG as a fundamental need throughout their organizations’ various people, risk and capital strategies, with complementary services and solutions that foster operational excellence and long-term organizational sustainability.

6 principal areas of focus

Willis Towers Watson helps organizations address an array of ESG challenges through six distinct, yet connected, primary areas of focus. From board-level training through to strategy, implementation and reporting, we deploy expertise and solutions that draw on the breadth of Willis Towers Watson to address clients’ unique requirements.

The “G” in ESG is perhaps the most important, because without good governance, efforts to support environmental and social priorities likely will fall short. With their focus on working with management to sort through myriad opinions, initiatives and goals, boards are well positioned to take the lead on their organizations’ ESG strategies.

Climate change and the transition to a net-zero economy pose new challenges for all organizations and governments. Our global, multi-disciplinary team of experts can help you act now to manage today’s climate risks and develop a strategic response for the long term.

Risk management is at the core of corporate governance as it is critical for creating a sustainable, resilient organization. Willis Towers Watson takes a holistic, portfolio approach to risk management, using data and analytics to incorporate quantification, technology and subject matter expertise into our solutions.

SustainabIe investing (SI) describes long-term, finance-driven strategies that integrate environmental, social and governance (ESG) factors, effective stewardship and real-world impact in investment arrangements. It entails good risk management and supports a robust investment industry.

Willis Towers Watson helps organization to create healthy company cultures, where diversity, equity and inclusion is steeped in the talent experience and employees bring their best selves to work, collaborating to increase overall employee engagement and wellbeing.

Few actions taken under the environmental aspect of ESG can be achieved without human involvement. Sustained success requires considering the social factor of environmental and governance goals (and vice versa). Organizations need physically and emotionally healthy, financially secure and socially connected employees to deliver on their ESG commitments.

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