Everyone’s talking about ESG investing. But what is it, what does it involve and why do you need to be thinking about it? Three Gen.T honourees share some insights into these issues and more
ESG stands for environmental, social and governance. ESG investment, says Angela Kwan, co-founder of Catalyser, which allows large companies to co-ordinate and quantify the social impact of their employees’ charitable activities, “recognises that immediate profits or share prices are not the only measures of company health and success, and recognises the social impact and accountability of corporations to the broader communities they operate in”.
That, as Kathlyn Tan, Singapore-based director of the Rumah Group, who leads her family investment company’s sustainability initiatives, puts it, “could include assessing a company’s impacts in areas like anti-corruption, emissions, environmental compliance, occupational health and safety, as well as diversity and equal opportunities, among many others”.
So it means compromising on returns?
On the contrary: the view that ESG investment necessarily involves taking a financial hit is outmoded. In fact, it’s gone mainstream, says Durrie Hassan, Malaysia-based executive director of philanthropy and impact investment company Visible Mission.
“The majority of stakeholders in financial markets, from publicly listed companies to private equity funds, now actively report on their ESG criteria and related impact frameworks. It is becoming more of the norm for these stakeholders to address ethical and responsible issues in their operations.”
According to Kwan, though, thinking solely in financial terms misses the point. “I think it delivers returns but also changes definitions of ‘return’ beyond just earnings and profits. ESG is most effective if it is integrated into all aspects of company operations and culture, and can deliver value in multiple forms.”
See also: ESG Disclosure: From Risk Management Necessity to Ethical Imperative
