With Asia set to lead economic growth in the coming decade, the region’s companies and business leaders will play a prominent role in the sustainable development agenda. Setting targets will help bridge the intention-action gap, Refinitiv said.
As Asia experiences economic growth and undergoes large-scale development, organizations must balance financial targets with sustainable development and take their ESG responsibilities seriously, financial markets data provider Refinitiv said in its first report on sustainable finance in Asia, published this week.
According to the report, companies in Asia have «made great strides» in greening their supply chains and investing in environmental product development. However, they have also been «worryingly stagnant» in measuring biodiversity impact. In particular, while Asian firms are largely on par with their global peers in terms of environmental impact, there is a clear gap between intention and action.
Intention-Action Gap
A much larger share of companies have policies on emission, waste management and water efficiency than those with actual targets for improvement – 69 percent of companies in Asia have carbon dioxide emissions policies, but only 30 percent specified actual targets. For water conservation, 62 companies have a policy, but only 16 percent had targets.
Worryingly, 77 percent of firms in China have emissions polices but only 8 percent have reduction targets. Refinitiv stressed that having targets can make a significant impact on action over time.
More Responsible Investments
Refinitiv noted investor appetite for sustainable investments and the «substantial growth» in the issuance of green bonds in Asia Pacific and Japan in the first half of 2019. The region, with 25.4 percent market share, raised a record high of $21.9 billion, up 29.6 percent year-on-year.
«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,» said Julia Walker, Refinitiv head of Market Development, Risk.
Hong Kong Leads
Companies in Hong Kong recorded the best environmental performance in Asia, scoring 70.06, compared to the region's average of 62.34 and the global average of 59.6. Singapore only scored 57.02, narrowly beating bottom-ranked China (56.10).
«Financing a Sustainable Future in Asia,» which covers 944 of the largest companies in eight Asian markets, focuses on environmental performance metrics, analyzing Refinitiv's ESG data from sustainability reporting between FY2013 and FY2017.
