The Asia-Pacific region has an important role to play in addressing global ESG concerns, panelists at PRI’s APAC Digital Symposium opined.
“A strong intervention from the Asia-Pacific region is needed,” said Fiona Reynolds, CEO of the Principles for Responsible Investment (PRI), asserting that transition to a sustainable society cannot occur without a concerted global effort.
Reynolds emphasised the need to go further and faster, through collaborative action and multiple partners moving in the same direction.
“It’s been a particular highlight to hear from speakers across such a range of markets and perspectives in this region,” she said, closing the PRI’s APAC Digital Symposium, held virtually from 14 to 17 September. “I think it shows that despite significant differences in the APAC markets, and no matter how big the challenges, responsible investment is possible everywhere.”
Throughout the week, panelists from Asia-Pacific highlighted a greater awareness of the need to address existential risks and climate change. Social issues as a result of the Covid-19 pandemic have also risen high on the sustainability agenda.
Ashley Alder, CEO of Hong Kong’s Securities and Futures Commission and head of the International Organisation of Securities Commissions (IOSCO), addressed the challenges for asset owners and their service providers from a regulatory perspective, noting the need for increased coordination.
“The first, and I think the most important challenge in the green finance world, is consistency and compatibility of information disseminated through corporate disclosures and at the asset manager level. It is absolutely essential on a global basis,” he said in a speech opening the event.
Diverse sustainable frameworks and standards have led to confusion, he said, resulting in a lack of consistency and compatibility of information.
Another issue, which, according to Alder, “tends to be underplayed” is that of greenwashing. “It is now becoming more serious,” he said. “One example I can give is the use, or misuse, of possibly incompatible ESG ratings and scores produced by third-party agencies, where measurement criteria are diverse. Firms can pick and choose the ones that fit their bill, but that may not be a decision useful for investors.”
Regulatory bodies are doubling down on their efforts to tackle these challenges, Alder insisted. “IOSCO has set up a sustainability task force at board level,” he said. “It has set itself the task of finding out the most decision-useful comparable and consistent disclosures for investors, which should fall within the competence of securities regulators.”
Speaking on Wednesday, Tokutaro Nakai, Vice Minister at Japan’s Ministry of the Environment, highlighted both recent growth in ESG investing in the country, citing a six-fold increase between 2016-2019, and regulatory initiatives to improve disclosures on ESG risks. These include 2018 guidance to promote information disclosure in line with recommendations from the Task Force on Climate-related Financial Disclosures.