Refinitiv, one of the world’s largest providers of financial markets data and infrastructure, has published its inaugural Financing a Sustainable Future in Asia report today.
This report is the first in a series which looks at the Environmental, Social, Governance (ESG) performance of the largest companies across Asia, with the first edition focused on Environmental performance metrics.
The report finds that Asia’s largest companies are comparable with their global peers in reporting on environmental sustainability, with the average environment score for the Asia region (62.34) slightly exceeding the global average (59.6). Out of the eight Asian markets studied, companies in Hong Kong recorded the best overall performance in Asia with an average score of 70.06, followed by South Korea (64.57) and India (63.12).
Intention - Action Gap
A clear gap is seen between intention and action, with a greater portion of Asian companies having policies on emissions, waste management, and water efficiency, than those with actual targets for improvement. Across the region, the largest disparity is in resource and waste management, with 82% of Asian companies adopting waste reduction policies, but only 28% having specific waste reduction targets to back up their policies. According to the report, targets can make a significant impact on action over time and drive real change.
Great Strides in Supply Chain
The report also highlights that Asian companies have made considerable progress in building more ethical supply chains. The largest increase in companies with supply chain policies has been in Singapore, which saw a 40% jump over five years, from 15% in FY2013 to 55% in FY2017. However, Singaporean companies lag the region in the development of environmentally conscious products, with only 40% developing environmentally friendly products and services, compared to 56% of companies in Asia.
Biodiversity Off the Menu
Biodiversity refers to biological diversity, and ultimately the health of the world’s plant and animal life and habitats. When looking at biodiversity impact, it is revealed that companies both in Asia and globally have been worryingly stagnant in this area, with just 24% of companies globally and 29% in Asia measuring this. Across the region, Japanese companies are the most advanced in this area, with 40% measuring biodiversity impact, and Taiwan the lowest at 12%.
Elena Philipova, Global Head of ESG at Refinitiv, said, “With Asia set to lead global economic growth in the coming decade, the region’s companies and business leaders will play a prominent role in the sustainable development agenda. As many of the world’s most pressing environmental and social concerns, such as climate change and social inequality, reach critical junctures, it is important that companies take their responsibilities seriously. ESG data and transparency play an important role to drive and influence the changes required to sustain future economic and social growth.”
Julia Walker, Head of Market Development, Risk at Refinitiv, said, “Achieving the Sustainable Development Goals is a collective effort that starts with the most influential members of society, including large companies, leading the way. It requires a deep collaboration between the public and private sectors, as well as mobilisation of significant finances to succeed. Daily, we see more financial institutions increasing due diligence and directing investment towards more responsible and sustainable companies and investments. As concerns in areas such as climate change grow, we expect this trend to accelerate.”
Below are the key findings for Asia:
• Based on Refinitiv’s Environmental Pillar Scores, the regional average score for Asia is 62.34, which is slightly higher than the global average of 59.6.
o Within Asia, companies in Hong Kong (70.06) performed the best in the region, followed by South Korea (64.57) and India (63.12).
• Emissions: 69% of Asian companies have emissions reduction policies, which is a significant increase from 55% in 2013. However, Asian companies with specific emissions reduction targets remained relatively stagnant, with a slight increase from 28% in 2013 to 30% in 2017.
o Hong Kong leads the way in Asia around adopting emissions policies, where 87% of organisations have emissions policies, while Japan fared the best for emissions reductions targets.
o 53% of Singaporean companies have emissions policies and 33% have emissions reductions targets.
o China has the largest gap between intention and action, where 77% of companies have emissions polices but only 8% have reduction targets.
• Water efficiency: 62% of the companies in Asia have a water efficiency policy, but only 16% maintain specific water efficiency targets.
o Hong Kong leads the region in setting water efficiency polices at 81%, while China experienced the greatest growth of 44% increase over five years.
o 60% of Singaporean companies have water efficiency policies and 18% maintain targets.
• Ethical supply chains: 56% of companies in Asia have supply chain policies and are committed to developing environmentally products and services.
About the report
The Financing a Sustainable Future in Asia report is based on an analysis of Refinitiv’s latest ESG data, based on sustainability reporting produced following the financial years of FY2013 and FY2017. Refinitiv’s ESG database covers 70% of global market cap, and this report analysed data on 944 companies across 8 markets in the Asia region, including China (88), Hong Kong (62), India (85), Malaysia (46), Singapore (40), South Korea (103), Taiwan (121) and Japan (399).