Interest in sustainable investing is growing in Asia, pushing companies to increase their ESG efforts.
Analysts say that greater supply-chain transparency, regulator support, and investor engagement is starting to shift sustainability practices in Asia, the South China Morning Post’s Karen Yeung reported.
“We are talking to many companies in Asia on topics like board independence and quality, remuneration policies and capital allocation policies,” Masja Zandbergen, head of ESG integration at the Dutch asset manager Robeco told the publication. “To start reporting on carbon footprint or human capital management will lead to more knowledge and ultimately better policies and procedures. We believe that good ESG policies in the long run will lead to better and more stable investment returns.”
Yeung cited University of Hamburg research aggregating results from more than 2,000 empirical studies conducted on the relationship between ESG and corporate financial performance since the 1970s. Of those studies, roughly 90% demonstrated a non-negative correlation between ESG criteria and corporate performance. Most important, the majority of those studies showed a positive correlation.
However, many businesses still have a long way to go before they meet investor expectations for disclosure and reporting. The pressure for companies to step up extends well beyond Asia, and has led to new methodologies for tracking and analyzing performance. This includes a sustainable investing framework being developed by CUNY and Harvard University with UBS Asset Management.
Dinah A. Koehler, a research specialist on the sustainable equities team at UBS Asset Management, told Environmental Leader that the team leveraged advances in scientific disciplines and linked them to corporate data on products and services that contribute to sustainable environmental and human systems.
“The aim was to provide systematic, transparent, and verifiable metrics of success based on well-accepted scientific approaches,” she said.
David Parham, deputy director of research at the Sustainability Accounting Standards Board, recently spoke with Environmental Leader about the SASB team’s plan to finalize their industry-specific disclosure framework later this year.
“There is competitive motivation to ensure that you are communicating your full value proposition to investors,” he said. “If the competition is able to paint a full picture of why they are a good investment based on ESG performance and your company isn’t, the investment community will consider that in its decision-making process.”
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