Assessing sustainability outcomes across modern businesses has become increasingly important, but it’s not without its challenges in our corner of the world.

“Environment, Social and corporate Governance” (ESG) is a set of non-financial criteria used to measure a company’s performance across a large range of intangible areas that can be broadly grouped under the notion of sustainability.

If you haven’t yet heard much about it, you soon will. With each passing day, ESG seeps further into company mission statements and onto the agenda of board meetings.

A very early example of the ESG mindset was the Western corporate reaction to apartheid in South Africa during the 1970s, when many companies disinvested in the country or refused to trade with it for ethical reasons.

ESG has diversified from this narrow base to encompass a range of important issues such as carbon emissions, energy efficiency, gender and racial equality, ethical corporate practices, societal contributions, boardroom diversity and more. Now we hear of the “triple bottom line” of social, environmental and economic excellence. Board chairpersons are expected to be able to enunciate their company’s stance on ESG.

We’re also seeing Chief Sustainability Officers increasing in prevalence. In Singapore, Mediacorp, ComfortDelGro and UOB have all appointed CSOs in the past few months or have set up new board committees to focus on these initiatives.

So what is the status of ESG in corporate Asia? Are Asian companies leading, following, embracing or ignoring ESG in 2021?

First, the geopolitical backdrop in Asia is worth considering. The Asia Pacific Sustainable Goal Development Report 2021 issued by the United Nations ESCAP (Economic and Social Commission for Asia Pacific) reviewed, in great detail, the national/public predicament in Asia through the lens of seventeen Sustainable Development Goals (SDGs). ESCAP marked hard and the report is not positive:

“The Asia Pacific region is not on track to achieve any of its seventeen SDGs by 2030. On its current trajectory, the region may achieve less than 10% of the SDG targets.”

So perhaps it can be said that companies in Asia are labouring under difficult circumstances, and possibly this is why the needles are not all pointing in the one direction. A recent ING survey sounded an optimistic tone, and CNBC suggests that Asian companies are catching up to their western counterparts on ESG performance. But measurement and reporting on ESG issues is the critical first step in commitment to improvement, and COVID-19 may have made that more difficult. A study by Taipei-based consultancy CSRone finds that big listed firms in most of the region regressed in terms of reporting their ESG performance in 2020.

But there is good news on ESG development in corporate Asia. As usual, Singapore is the pioneering force and, as usual, it’s because of Singapore government policy.

Singapore’s policies are unequivocal: “Sustainability and addressing climate change must be a priority for businesses to thrive in the long term. Companies need to embed sustainability in their DNA and to recognise that going green is not only good for the environment,” says Grace Fu, the Minister for Sustainability and the Environment. The policy is underpinned by government grants like the Energy Efficiency Fund and the 3R Fund. Enterprise Singapore is also developing the Enterprise Sustainability Programme to support local enterprises in developing new capabilities in sustainability and in capturing opportunities in the green economy.

Sustainability-linked financing — a critical driver of innovation — is being boosted too. Last November, The Monetary Authority of Singapore (MAS) announced the launch of the Green and Sustainability-Linked Loan Grant Scheme (GSLS) to help companies obtain green and sustainable financing. Last year, SGX announced that it would spend US$20 million on a multi-year plan to enhance the ESG capabilities of the exchange and its partners.

ESG is an important struggle for the planet. But increasingly it’s a struggle shared by the public and private sectors, and there is reason to hope that innovative Asian governments can help Asia lead the world to a more sustainable future.

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