SINGAPORE — Companies in Asia are catching up with their Western friends in adopting sustainability and moral practices, mentioned Loh Boon Chye, chief govt of the Singapore Exchange.
Environment, social and governance — or ESG for brief — refers to a set of standards used to measure an organization’s efficiency in a variety of areas comparable to carbon emissions, contributions to society and boardroom range.
Those standards are more and more utilized by traders globally — alongside conventional monetary metrics — to guage potential investments.
Europe and the U.S. have been main the adoption of ESG, however Loh instructed CNBC’s Sri Jegarajah that it is solely a matter of time that extra companies in Asia soar on the bandwagon.
“I believe 2020 has been an inflection level,” the CEO mentioned on Monday.
“While we might say that Asia lags behind the Western hemisphere, I might say there’s been a higher consciousness of ESG and certainly extra companies are adopting sustainability and ESG practices,” mentioned Loh, who’s a member of CNBC’s ESG Council.
The Covid-19 pandemic has highlighted how catastrophic occasions would influence funding returns.
Companies with robust ESG practices outperformed in the course of the pandemic, and that led extra traders to prioritize investing in such firms.
In Asia-Pacific, 79% of investors increased ESG investments “considerably” or “reasonably” in response to the pandemic — barely increased than the worldwide share of 77%, based on an MSCI survey of institutional traders.
Loh mentioned the SGX is working to launch inventory indexes that adjust to ESG rules, in addition to encourage the listings of inexperienced and sustainable bonds.
— CNBC’s Sumathi Bala contributed to this report.
