Demand from investors drives shift towards sustainable business in Asia
By Karen Yeung
Many Asian companies remain reluctant to step up their environmental, social, and governance (ESG) efforts, unaware of the potential financial benefits of doing so. But greater supply-chain transparency, support from regulators, and engagement from investors are starting to drive changes in sustainable practices in the region, analysts said.
There is growing evidence that ethical and sustainable business practices allow companies to better manage risk and explore opportunities in a fast-changing world, and this can make them more profitable than firms that cut corners or ignore such issues. This also makes them a better bet for investors.
More than 2,000 academic studies have been conducted on the relationship between ESG and corporate financial performance, with 92 per cent of them showing a positive or neutral correlation between sound sustainability practices and stock price performance, according to the University of Hamburg.
To meet the growing interest from investors, more ESG or thematic funds are being offered to attract private capital.
Photo courtesy of Pavel Ahmed.