The Sourcing Elite Board (SEB), established by Global Sources, is a membership-based club limited to invited top professionals in the industry. Currently, the club has over 50 members and networks in Shanghai and Hong Kong, primarily consisting of senior management from the sourcing industry and professionals with academic backgrounds. SEB organizes internal sharing events that facilitate in-depth discussions on sourcing strategies, e-commerce innovations, and insights and forecasts on the global economic landscape. It aims to inspire innovation, push industry boundaries, and provide a vibrant exchange platform for experts and practitioners in sourcing.
Chief Executive China recently interviewed Valerio D’Angelo, a member of the SEB, who shared his perspective on implementing corporate ESG strategies and effectively communicating their value.
Valerio D'Angelo is an expert in public affairs and international corporate strategy, having held senior positions in several Fortune 500 consumer goods companies in Europe and the US. AROCA Group, which he represents, is recognized as one of the leading public affairs consulting firms in Southeast Asia, focusing on providing clients with executive training, in-depth policy analysis, and unique public affairs consulting services.
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What are the most pressing ESG challenges currently facing businesses, and how should they balance priorities among cost control, compliance requirements, and long-term sustainability goals?
This is indeed a broad yet compelling question. While it’s difficult to rank these pressures in a fixed order, the most critical step is to develop a long-term, structured strategy after taking all dimensions into account.
If a company’s direction is clear and well-defined, everything else can fall into place. Sustainability must be approached holistically, considering external factors that may influence strategy – while maintaining open communication with stakeholders and partners.
ESG regulations vary widely across markets and are evolving rapidly. Until recently, compliance was largely a one-way street: regulators set the rules, and companies followed. But we’re now seeing more dialogue between businesses and regulators. For example, certain EU ESG regulations have been debated, delayed, and refined – a positive shift that ultimately leads to a more level playing field.
Balancing all factors, however, remains challenging. Cost is a key consideration. Sometimes regulations impose operational burdens that smaller companies simply cannot bear. This is precisely why business-regulator dialogue is essential – and it’s becoming more common, even among smaller enterprises. In the end, engagement is everything.
On a related note, while governance standards in ESG are expected to remain relatively stable, the most significant changes will continue to unfold across the social and environmental dimensions.
We were delighted to have you participate in our recent Global Sources webinar, where you shared outstanding ESG practices from Unilever and Samsung. Could you elaborate on how investments in sustainability help companies navigate challenges in the current economic climate?
Regardless of economic conditions, sustainability has become a strategic pillar for any forward-looking business – both commercially and socially. To a large extent, sustainability transcends short-term economic fluctuations. It represents a response to public expectations and reflects a corporate commitment to doing what’s right: ensuring operations are sustainable in the long run.
In recent years, the economic environment has been undeniably tight. Companies have faced supply chain restructuring and high inflation. Against this backdrop, launching sustainability initiatives – which require funding – may understandably be perceived as an added cost burden. That is indeed a key challenge.
But as I mentioned earlier, it’s essential to maintain a long-term perspective. ESG is, in fact, an investment in the future – not a one-time expense or a short-term tactic, but a commitment that yields returns over many years. When viewed this way, we stop seeing it purely as a cost.
On a practical level, companies vary in scale and capacity. The goal isn’t to do everything at once, but to start with a few focused actions – choose two or three sustainability priorities and embed them deeply into corporate strategy. With a long-term mindset, businesses can gradually integrate more sustainable practices step by step.
Ultimately, it comes down to balancing the “what” and the “how,” while always keeping long-term thinking at the core.
So, are you saying that ESG isn’t something that can deliver returns in the short term?
That’s correct. In most cases, the commercial benefits that offset the costs of ESG initiatives take time to materialize. However, there are also ways to make the business value apparent more quickly.
For example, companies are increasingly required – whether by regulation or consumer expectations – to communicate their ESG efforts transparently. By proactively sharing their sustainability journey through reports and public messaging, businesses can earn positive feedback from consumers within a shorter timeframe. That said, even these efforts still require thoughtful planning and execution over a period of time.
So, you’re right – ESG is not typically a “10-year return” endeavor.
During the webinar, you also encouraged companies to engage in dialogue with stakeholders – including governments, NGOs, and industry associations – both to avoid perceptions of "greenwashing" and to help shape the future business environment. Could you share some practical examples of how businesses can effectively initiate and maintain this type of engagement?
Maintaining communication with stakeholders is undoubtedly a strategic pillar for any organization. This includes not only internal employees but also external parties such as government bodies, regulators, non-governmental organizations, and industry associations.
I've often observed situations where regulatory agencies introduce ESG policies with positive intentions and the right goals, yet the implementation ends up counterproductive – sometimes making business operations difficult or even creating unintended negative impacts on areas like taxation and employment. Why does this happen?
Policy research institutions typically focus on long-term societal benefits rather than commercial drivers. While their aim – to improve community well-being – is commendable, they may not always fully grasp the practical complexities of business operations. It's essential for companies to help these stakeholders understand the intricacies of implementing sustainability initiatives. All environmental, social, and governance dimensions must be considered, and that requires ongoing communication among all parties.
Indeed, many regulations have been implemented without sufficient dialogue or consultation. Without citing specific cases, we see examples of this frequently. Take hypothecated taxes – levies imposed on specific products or behaviors, with revenues intended to offset related harms. While conceptually straightforward, this approach often lacks a long-term perspective, is applied too broadly, and sometimes fails to address the unintended consequences of the "harm" it aims to mitigate.
In recent years, however, we’ve started to see regulators becoming more open and willing to engage with businesses. A growing number recognize that some past regulations or practices may have "gone a bit too far," creating challenges not only for companies but also for employment, public livelihood, and economic vitality. Today, many are seeking to recalibrate and reopen dialogue – a very positive trend.
You mentioned that ESG could lead to a "survival of the fittest" dynamic, accelerating industry consolidation and putting pressure on SMEs. Would you consider this a downside of ESG?
Industry consolidation tends to occur during economically challenging periods – with or without ESG pressures. However, excessively strict or rigid ESG regulations can disproportionately burden smaller companies, which may lack the resources to comply. This could force them to exit the market or be acquired, further driving consolidation. More players typically mean healthier competition, greater innovation, and more affordable prices for consumers. That’s why, in my view, extreme consolidation isn’t desirable.
This is precisely why ongoing dialogue with regulators is so critical. We need to ensure that new ESG frameworks are designed with all types of businesses in mind and that their potential impacts are carefully evaluated. Involving smaller enterprises in industry associations and policy discussions can help create a balanced, fair playing field for everyone.
There's a term often used with irony – "low human rights advantage" – referring to the competitive edge some entities gain by applying lower standards in areas like labor costs. Do you believe a similar "low ESG advantage" actually exists?
From a corporate perspective, I do not believe that lowering ESG standards for short-term gain is a sustainable strategy. Any unethical practices or violations of international norms will inevitably come to light, ultimately causing irreparable damage to the enterprise. Such an approach is simply unwise for long-term development.
On a broader level, I do not foresee a widespread dilution of ESG standards. On the contrary, companies are becoming increasingly proactive in this area – particularly on environmental and social dimensions. They are developing new approaches and leveraging technology to embed ESG into their operations. Businesses have come to recognize that strong ESG performance provides strategic advantages, and many now view it as a critical tool for driving growth, securing long-term market share, and sustaining profitability. As a result, I believe the momentum for maintaining – and even raising – ESG standards will continue to grow, driven by companies themselves, each acting within their resource capacities and economic contexts.
In your opinion, can digital tools and AI effectively advance the adoption of ESG practices?
I believe these technologies will play an increasingly significant role in driving ESG progress – across environmental, social, and governance dimensions. Organizations should actively leverage them to facilitate the design and implementation of ESG strategies, leading to comprehensive and positive business impact.
To be candid, the primary purpose of a business is not philanthropy. Companies exist to operate effectively and create value for shareholders – that remains the priority. While value has traditionally been measured in financial terms, we are entering an era where consumers increasingly demand sustainable products and ethical supply chains. ESG, therefore, serves as a strategic tool that enables businesses to deliver shareholder value in a responsible manner. Digitalization, in this context, reduces costs and scales ESG implementation efficiently. In essence, it acts as a key enabler for credible and scalable ESG strategies.
ESG was originally intended to be implemented by national governments based on their own interpretations, regulating organizations within their jurisdictions. Why has European ESG compliance now become a de facto mandatory requirement for most companies globally?
The European Union functions as a single market and customs union. As a collective, it ranks among the world’s top three economies, alongside the United States and China. Given its position as a major trading partner for many countries, the EU wields considerable influence over global business practices.
Moreover, the EU has consistently been a frontrunner in setting standards – sometimes even regarded as overly stringent. So, it’s a natural evolution that the EU has emerged not necessarily as the originator, but certainly as a key reference point in ESG rulemaking.
At the same time, jurisdictions around the world are closely observing the EU’s approach. In Southeast Asia, for example, where regulatory frameworks still vary significantly across countries, governments are striving to balance domestic social priorities with the need to facilitate cross-border business without excessive regulatory barriers. Through free trade negotiations and alignment initiatives, many are adopting elements of the EU’s ESG framework to ensure a consistent set of rules for exporters.
This convergence stems from a complex interplay of ethical, social, economic, competitive, and geopolitical factors. As a result, EU ESG standards are gradually becoming the benchmark – a development that may ultimately have a positive effect. Should Southeast Asian regulations grow more harmonized over time, it would simplify compliance not only for trade with Europe, but for doing business across the region itself.
Established in 2022 by Global Sources, the Sourcing Elite Board (SEB) is a collaborative initiative dedicated to advancing the sourcing industry through shared expertise and innovative strategies. Senior executives, from buying offices to retailers and brands, are welcome to join this distinguished community.
• The content of this interview reflects only the views of the interviewee and not necessarily those of Chief Executive China or Global Sources.
