Earlier this month, IR Magazine held its first ESG Integration Forum – Asia. The event brings together different stakeholders from within companies, such as IR, sustainability and legal professionals, to discuss how to adapt to the growing focus on ESG issues.
In the first session, speakers discussed how the ESG landscape has shifted in Asia over recent years. They talked about how climate risk and net-zero goals have become a huge focus for investors in the region, while noting that companies need to be able to talk fluently about a range of sustainability topics.
‘The past two years have really raised the heat and the pressure on companies to transition to a low-carbon future,’ said Esther An, chief sustainability officer at Singapore-based City Developments. ‘Everybody has learned that the health of our planet, people, business and economy is interconnected and inter-related.’
Ralph Dixon, director of environmental investments at YTL Corporation, the Malaysian infrastructure company, agreed that the sustainability space is ‘evolving very rapidly’, noting the emergence of Scope 4 emissions, also known as avoided emissions, as a new issue.
‘We’re going to see more demands from stakeholders such as investors and lenders, and they’re going to be more onerous on companies to disclose,’ he said. ‘Transparency has to increase.’
Jana Jevcakova, managing director and head of ESG for international at Morrow Sodali, said expectations over climate have steadily increased, with companies now expected to offer short and medium-term targets for their net-zero plan. She also pointed out that ESG is about much more than just climate or environmental issues. In particular, she noted that Asia-based companies have room to improve their governance practices and reporting – a legacy of the many family-owned businesses in the region.
The ‘G’ component is still very much driven by compliance rather than the business case, said Jevcakova. ‘The majority of businesses still don’t have a significant portion of institutional investors coming from overseas,’ she explained. ‘And the domestic investors are still not at a stage where they would really exert significant pressure on these companies to disclose better, to be more transparent or to have independence in decision-making, [but] we are seeing signs of it.’
Thoughts on standardization
The following session took a closer look at new ESG disclosure requirements and how to standardize reporting processes. With the International Sustainability Standards Board (ISSB) recently releasing two disclosure drafts, the panel considered what that could mean for reporting practices across Asia.
‘I think it’s a very important development for sustainability reporting, for disclosures on ESG,’ said Hendrik Rosenthal, director of group sustainability at Hong Kong-headquartered power business CLP. ‘The focus the ISSB has proposed is really on enterprise value: how is sustainability impacting your bottom line? And I think that’s where we have a lot to still explore and learn.’
‘We can expect [the ISSB] to first develop standards for a baseline for sustainability disclosures, primarily focusing on meeting the information investors need,’ noted Maricris Aldover-Ysmael, vice president of IR at Philippines-based Metro Pacific Investments Corporation.
‘Because it is taking a building-blocks approach, I think it will be able to easily facilitate the addition of requirements that are jurisdiction-specific or aimed at a broader group of stakeholders, so it’s definitely a fantastic development.’
Beyond the ‘E’
Other sessions focused specifically on the governance and social aspects of ESG programs. Lily Tsen, general counsel at Amcor Flexibles Asia Pacific, said her company has received many questions from investors about human capital management and how the business has fared through the pandemic.
‘I think [what] investors are really interested in hearing about is: how have we looked after our people?’ she said. ‘My organization is one that has been fairly resilient through the pandemic – we’ve certainly seen an uptick in the volume of work. And the question has been: how do we see ourselves in terms of continuing to engage, motivate and retain our people, and ensure they go to work and come home safely?’
William Wang, head of IR at OSL, a digital assets company, said the pandemic coincided with a period of high growth for the company, which it had to manage alongside lockdowns and other restrictions across its locations. ‘We never actually had a chance to meet and see each other,’ he said. ‘Everything was done over Zoom and over a line. Then it becomes extremely critical in terms of how we build a company culture… and this becomes critical for our investors.’
The day’s conversations also included how to manage ESG data internally and a Q&A with members of the buy side.
To find out more about the IR Magazine ESG Integration Forum – Asia or to watch replays of the sessions, please click here.