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[ESG Taiwan STAGE EP07] Leaders and culture for ESG of multinational companies

電子報 第0016期

IESE Business School | Professor Teen Lee (李逸庭 )

Abstract: Many companies are facing a crisis over how to retain and recruit talented workers.

ESGWD invites Dr. Yih-Teen Lee, a prominent professor in the field of Leadership of Cross-cultural Management at IESE Business School, to share his point of view on how multinational companies can develop ESG strategy to build up ESG corporate culture to retain and recruit global talents and increase their commitments to ethics and sustainability.

Dr. Louis:

The friend of the ESG World Citizen Foundation. I am Professor Louis Chen. It is my honor to have the opportunity to interview Professor Teen Lee. He’s a famous professor in the field of the Leadership of Multicultural Management at IESE Business School. Professor Lee, I think ESG is now very important for multinational companies. It’s not only a corporate strategy but also is related to corporate culture.

Q1. Can you give me your comment about ESG and sustainability? What’s the important strategy or the important content for the corporate culture about the ESG?

Prof. Lee:

Thank you, Professor Chen, for the invitation! In my opinion and observation, the ESG and the sustainability content can be managed in many ways by companies. Some companies might take it to the heart, meaning that they are very serious about that. They have developed lots of activities, practices and even been part of the core of their culture. But some companies can do it more superficially, like just to address that more instrumentally. This is probably one important question for all the managers to think deeply and define what they want.

ESG, as we all know that very well. It’s a wider consideration about the impact of companies on the society of the world. So, what we want also touches upon the purpose of a company. If managers still hold a more traditional paradigm, thinking that the purpose of a company is just to maximize the profit for shareholders, then the ESG and sustainability consideration might be more limited to the more instrumental aspect. That can also work, but I think the whole impact and the culture will still be seen by the workers or employees there.

But if the managers or the leaders of the companies can understand the fundamental purpose, the existence, the reason of being of the company is not just to make money, make a profit for the shareholders, and realize that is a purpose behind: what kind of value that they can generate through their services, through their generation of employee, and through their impact on society on the environment. This wider consideration might enable them to somehow shape a more profound culture that sincerely and authentically embeds their sustainability consideration and ESG consideration into their culture and even their operational model. That would somehow send a stronger message to the talent. So, if we want to consider the attraction of talents, this might resonate better with some of them who are more environmentally conscious. I think this is something that we can see more frequently for the younger generation. Maybe they are thinking that this is maybe their future as well.

As they may care more about the impact of the environment on society, it would be probably easier to convey this message. While at the same time they might be doing it in a serious way embracing ESG and sustainability, then attracting talent might be also easier to go through this way.

Dr. Louis:

Very good! Thank you, Professor Lee! Nowadays, including Taiwan and many Asian companies, are expanding globally to hire international talents to compete in the market around the world. I think it’s a major challenge for multinational companies in terms of t ESG strategy and communication with their talents.

Q2. Can you give us some comments about the ESG for multinational companies? How can they develop ESG strategy to build up ESG culture or communication with their talents to enable them to have more capacity, better performance, and more consensus about the ESG strategy?

Prof. Lee:

Thank you, Professor Chen. This is a very complex topic but a very good question. It might not be easy to say there can be an easy communication strategy. Connecting to what I have mentioned earlier, I think that is quite important for managers to clearly define what they want. Their fundamental attitude and approach toward ESG and sustainability need to be clearly defined. I would probably say that even though I would like to encourage more companies to connect their purpose with ESG, I also understand that maybe some owners, don’t want to do that. They can still do it instrumentally. Eventually, we probably need to accept that as well. However, I think what is more critical is to be very clear about one’s position.

Let’s say if we are sincerely committed to that, then the culture you can create, and the communication strategy related to that will be clearer. Let me reformulate these slight differences. I made a more general statement in the first question. That means the younger generation may be more attracted by companies that care about ESG and sustainability. That’s a general trend. Nevertheless, I think it’s also important to differentiate that we don’t need to probably generalize that much like there might be still some people that care more and some people that careless.

So, what is critical is to see that if we want to develop the kind of clear strategy that embraces ESG, then I think the resulting culture from that attitude and that kind of purpose will attract some type of talent. And if you don’t do that, the communication can still work, but somehow you might be attracting another type of talent. These two always have people who might be comfortable or attracted by different kinds of culture. But what is critical is to be clear and authentic to what you are, and what you want. The problem usually comes from inconsistency. Like some time, if we feel that we are embracing ESG, we are embracing sustainability, looks like we are sincere about that. But if the core, the leadership team, or the whole spirit is not doing that, these inconsistencies, these discrepancies might generate more harm. When talents are attracted by this kind of ESG or sustainability reach loaded kind of culture, and when they join the company, they discovered that this is not the case. At that time, the kind of frustration or disappointment could be much stronger, and the kind of damage it can create might be bigger than you just being clear and transparent at first. Maybe this is something we want to do, but it would be more instrumental. Then certain talent can maybe still be happy to work there.

Overall, I think the first critical thing is how to clearly define a position and convey a clear and consistent message to people. After that, when we are operating a more international situation, understanding the cultural uniqueness of each market, each talent becomes so important. This also may correspond to the need for different labor markets. Some markets might respond to ESG or sustainability more firmly; some societies might still be developing that. Eventually, we might need to formulate the communication message according to the specific cultural context of that place so that the communication content might be more targeted and effective in making people understand what you are, and what the company would be positioning.

Dr. Louis:

Wonderful! I think it’s quite important. For the priority, the leader and major management team need to think about the purpose of ESG and define the best strategy and consider different cultures, different demands, and different feelings about the workers. As you are a partner in different parts of the world, it may be a very complex system. But anyway, the purpose is the number one thing for the ESG and to commit it well.

Q3. Additionally, I think we have a serious problem with Ukraine and Russia. I think it’s a good case, right? How do the European companies especially the multinational companies in Europe respond to the crisis between Russia and Ukraine, and how do they communicate with their workers and partners around the world? Professor Lee, what’s your comment on it?

Prof. Lee:

I think this is also a very timely question and very important relevant. I have to say that I’m still struggling with this perspective, because during this process, I have been watching and collecting information, trying to understand the problem. And what I have discovered so far is that the situation is much more complex than it looks on the surface.

Where lots of people might be blaming Russian for this invasion, for this attack. I think that there are multiple more complex forces causing this conflict. In my perspective, it’s difficult to propose a kind of clear judgment or solution to that. But going back to your question, that is the response of the company.

What I appreciate very much is the kind of willingness to help Ukraine’s people so quickly, no matter who is the responsible party for causing this problem. But one thing is clear Ukraine’s people are suffering. They were deeply disrupted, and their life has been destroyed. Lots of people fleeing from Ukraine, and those people are fully innocent. They are not having anything to do with the decision that is been made on the top in a different kind of political power.

So, lots of companies what I saw is that they’re mobilizing resources to support Ukraine. Some of them suspended their operation in Russia. This part, I think that is still up to discussion as to whether we agree with that or not. But I think what is critical is to recognize that there is a very serious humanitarian crisis happening in this part of the world. And for companies as we have resources and have a kind of decision-making power, we can do certain contributions to certain things. So being able to quickly share either using the kind of financial resources or another kind of services that we can have, would also be something that we can actively be a player, being an important part of this community to do whatever we can to support the innocent people fleeing the country. I think this is something I appreciate very much.

Dr. Louis:

Very good! I think it’s a complex question, and you have given us a very good point, like the humanitarian and the universal value about how to treat the victim of the war properly, and how to participate in what we can do. These are the best policy for multinational companies.

Thank you, Professor Lee. This is a wonderful interview. I hope in the future, we can talk with you again. Thank you!

Prof. Lee:

Thank you, Professor Chen! It’s a pleasure! Thank you.

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