In every dark cloud, there is a silver lining. And so it was with how environmental, social and governance (ESG) investing evolved in 2022. There were plenty to take the wind out of its sails – coal mines restarting in Europe, greenwashing, and rising political opposition to ESG principles among certain segments in the US.
Yet these developments set the stage for ESG investing’s latest refit. As regulators, asset owners and managers delve deeper into the intricacies of how best to mitigate climate risks and define sustainability in investing, the interconnections among the environment, societal needs and good corporate governance are becoming clear. Clean energy, for example, is no longer adequate without energy security. Crucial to energy security is a just transition.
Viewed in that light, ESG becomes the pathway on which economies, especially developing Asia, should reconfigure their recovery from Covid-19. Given the clear and present danger of climate change to the region, ongoing supply-chain disruptions, rising inflation, and increased stakeholder expectations, combining the three factors of ESG for this region is now more essential than a few years ago.
However, despite the progress of the past years, companies continue to face challenges. Navigating a web of complicated and differing regulations across Asia is a tricky business. Transparency and increased disclosure are the necessary foundation to hive away from the hype that is what’s behind accusations of greenwashing. Yet, it is vital to get this right.
As new rules come into play, compliance workloads increase for companies attempting to meet additional reporting requirements and respond to evolving global standards. Policymakers need to adopt rules based on these global sets of definitions while being cognizant of the local and especially social conditions.
Indeed, the growing demand from investors and the regulatory push for sustainability have expanded the ESG investment landscape. Investors, who have seen the value of integrating ESG criteria into their investment process, are well positioned to take advantage of the opportunities that sustainable investment products provide.
The Asset Events is delighted to be organizing the 6th ESG Summit, Asia-Pacific’s leading ESG forum on Beyond the Hype, which brings together thought leaders from governments, corporates, organizations, investment funds and financial institutions to discuss the rapidly evolving sustainability landscape.