Corporate priorities of the day

AS WE gear up for the last quarter of 2022, we find ourselves in an even more complex market environment than when the year began. Just when we thought we were getting used to living with Covid-19, geopolitical tensions in Europe were thrown into the mix, exacerbating issues like supply chain asymmetries and climate concerns.

This was the backdrop against which Kearney’s 2022 CEO Retreat was held in June at Raffles Hotel Singapore. The agenda of this year’s gathering of CEOs and business leaders as part of our Global Business Policy Council revolved around how businesses can meet the challenges of operating in an age of hyper-transformation. Based on their discussions, here are 5 actionable tips for businesses in Asia-Pacific to navigate these challenges.

Invest in an ESG agenda

With global temperatures projected to rise by about 1.5 degrees Celcius by 2050, ESG has undoubtedly become a front-and-centre issue for every CEO and board member.

Pursuing an environmental social and governance (ESG) agenda might result in higher costs for many corporates, particularly when it comes to manufacturing net-zero or carbon-neutral products.

However, research indicates that corporates that invest in a transparent and authentic ESG agenda garner more investor and customer attention. According to our 2022 FDI Confidence Index, 87 per cent of investors in Asia-Pacific believe their companies are prioritising investing in foreign entities that adhere to ESG best practices.

Clients are also willing to pay more for environmentally friendly products. As an example, Australians are willing to pay 40 to 80 per cent more for products and services from leading ESG performers, and 18 to 36 percent are willing to buy more from such ESG role models.

Given how ESG can indeed be a source of competitive advantage for consumer organisations, working on an ESG agenda is pivotal. Organisations need to progressively think about showcasing green products and services, following through on their social obligations and communicating to consumers that their internal governance policies are strong. This will translate to building long-term trust and consumer loyalty.

Consider alternative supply chains 

The Russia-Ukraine conflict has completely disrupted economies and supply chains across Europe and beyond. As such, businesses need to come up with a game plan for supply chain resilience. This includes diversifying their supply chain beyond say, China, to countries like Vietnam, the Philippines and India.

In Asia, ongoing geopolitical tensions also have numerous implications for businesses, particularly when it comes to the current semiconductor shortage. Given the capital-intensive nature of the semiconductor industry, requiring heavy investment in infrastructure and human capital, there are no short-term solutions or alternatives. However, businesses can work towards building up resilience in the medium to long term. They can consider countries such as Singapore for building prefab and fabrication units.

Look to thriving business hubs like Singapore

Aside from its semiconductor manufacturing capabilities, Singapore will continue to be one of the fastest-growing hubs in Asia. The continent, being less dependent on European commodities, has generally remained relatively insulated from the recent geopolitical tensions in Europe. China and India are the 2 largest and fastest growing economies in Asia, and Singapore will undoubtedly ride that wave of growth.

Singapore has also emerged as one of the most stable locations, both in Asean and across Asia as a whole. The country has done extremely well in combating the pandemic, allowing it to be a place where both businesses and trade can thrive and fare well. Business-friendly policies and stable governance have also helped businesses flourish. Hence Singapore remains an attractive destination for migrant populations to move to. Talent is in abundant supply, with the government keeping costs and other inflationary impacts under control. Corporates can certainly look to expanding, investing or planting roots in Singapore as a hub to grow in the wider region.

Cultivate talent for the future

In terms of the digital economy, Asia is also performing well and leading the pack. Technology talent is in abundance in countries like India. South Korea, Japan and Singapore are also big hubs for digital talent.

Moving forward, businesses need to think about cultivating talent for the future. The technology requirements of the past no longer meet the needs of the future. There are now business needs in the areas of 5G, cybersecurity, artificial intelligence and deep data sciences. These all require new talent that organisations need to be investing in.

Cybersecurity, in particular, is a key area to address. This relates not just to finding talent but to building cyber resilience. All companies need to consider their cyber policies and cyber governance. Topics like digital identity have become leading issues of focus in Europe. Trading over the Internet, whether it’s stablecoins or other forms of cryptocurrency, has gained traction in Asia as well. It’s imperative that corporates, not just in Asia but around the world, invest significantly in cybersecurity.

Establish business resilience through scenario planning

Whether it is cyber threats, political conflicts or a pandemic, corporate leaders should build general business resilience to weather future storms.

This includes being proactive in scenario planning, and actively monitoring one’s organisation for a variety of situations that might emerge. For example, conducting drills and practice sessions, or planning for Black Swan events.

One thing that all participants agreed on during the CEO Retreat is that change is certain – it’s not if but when it will happen. In the weeks following the event, we have already seen various developments around the world that have fuelled uncertainty in geopolitics and the economy. Thinking through possible scenarios, planning for them and fortifying the organisational muscle are critical in addressing ongoing hyper-transformations in the global arena.

The writer is regional head and chairman, Asia-Pacific, at Kearney