Japan, South Korea - Asia’s Leading ESG performers

Thursday, 06 October 2011
By Susan Drury

Companies in Japan and South Korea have the highest overall performance on ESG issues, according to a new report from global responsible investment research specialists EIRIS. Improvements in these countries have been boosted through local initiatives such as the recent introduction of the “Low Carbon, Green Growth” initiative in Seoul, which outlines a plan to reduce carbon emissions, with a similar scheme operating in Japan.

The report focused on 786 Asian companies to assess how well they were addressing ESG challenges and comparing their performance to their European and North American peers. China, Hong Kong and Singapore based companies however have failed to make significant progress on ESG factors, according to EIRIS. China, for instance, the world’s second biggest economy, has made limited improvements on environmental issues, with only 5% of the companies analysed by EIRIS having strong environmental policies in place and just 2% displaying any proof of making progress on these issues.

The report, State of Responsible Business (Asia) found that Asian companies performed well on climate change but still needed to address other ‘material’ environmental risks arising from water management and biodiversity. Social stakeholder issues remain a key challenge, the report revealing that 90% of Asian companies with operations in countries “relevant for human rights concerns have no human rights policies in place.”

When comparing Asian companies to their global peers though an uneven picture emerges; the environmental polices of over 40% of Asian companies were assessed as good or excellent, compared to two-thirds of European companies, however only a quarter of North American companies received similarly high scores.

“It’s encouraging to see that companies in Asia are making progress on ESG and are overtaking their global peers in some areas. Looking ahead, increased regulatory pressures, greater reporting requirements and the development of sustainability have the potential to be the biggest drivers of ESG,” said Mark Robertson, Head of Communications at EIRIS.

There are big opportunities for companies and investors “to exploit the first mover advantage presented by enhanced social and governance disclosure in Asia,” considers EIRIS. Increased coverage of social and governance issues will open Asian companies to a broader investment base, especially outside Asia, where responsible investment is more firmly established.

For further information visit: EIRIS website.

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