Asian companies outperform the global average in terms of their sustainability management, SAM’s Asia Status Report 2018 reveals. However, the report also points to significant room for improvement overall as well as in specific areas. The wide range of sustainability scores within countries indicates that the early movers have not yet inspired a mass adoption of world-class sustainable practices and transparency standards in any of the 11 Asian countries covered.
- SAM’s Status Report for Asia highlights key strengths and specific areas of improvement that Asian companies need to work on to attract inflows from sustainability-oriented investors
- As expected, active participation prevails in corporations that can show a good sustainability performance
- Corporate governance and human rights identified as two key areas in which Asian companies need to improve
SAM’s first Status Report for Asia covering China, Hong Kong, India, Indonesia, Japan, Malaysia, Philippines, the Republic of Korea, Singapore, Taiwan, and Thailand provides a snapshot of companies’ sustainability performance. Drawing on the results of SAM’s annual Corporate Sustainability Assessment (CSA), the report provides insights into companies’ key strengths and weaknesses, and the extent to which they report on their sustainability management and practices.
Of the 1,165 companies listed on Asian stock exchanges that were invited to take part in the CSA 2018, 28% actively completed the assessment questionnaire. The remaining companies were assessed on the basis of publicly available information. A total of 82 Asian companies were selected for the DJSI World in 2018, translating into a good representation in the index, with a weight of 26% for Asian companies.
Asia outperforms overall, but lags in corporate governance
In a regional comparison, Asian companies were topped only by European countries in terms of their sustainability performance in 2018, and scored on a par with the world average in all three dimensions covered by the CSA – economic, environmental and social. A closer look reveals that they outperformed slightly in relation to all aspects of the environmental dimension, but showed a distinct underperformance on the corporate governance criterion. Like their global peers, Asian countries need to significantly ramp up their efforts in relation to the management of human rights.
The highest total score in the 2018 assessment was achieved by a Thai company, followed closely by runners-up from Taiwan, the Republic of Korea and Japan. In terms of median scores of actively participating companies, Thailand tops the ranking, followed by Taiwan, and Korea. The country with the largest number of invited companies, Japan, achieved a relatively lower median score.
Better scores for active CSA participants
Asian companies’ relatively low transparency scores in the CSA 2018 compared to the global average indicate a distinct need to catch up in terms of sustainability reporting to keep up with widespread expectations regarding public disclosure of ESG information among global investors and other stakeholders.
Overall, the report reveals a significant gap in average and median country results between active CSA participants and companies that choose not to participate and are assessed solely on the basis of publicly available information. Given the clear outperformance of active CSA participants, the report concludes that RobecoSAM’s annual assessment can serve as a useful tool to guide Asian companies on their sustainability journey as more and more investors are using sustainability data to assess investment options.