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Business value, investors and ESG

“We’re all here because the time is now,” said TPB Founder and Director Pat Dwyer opening Manila’s second Breakfast with Purpose event. As investor demand for ESG data continues to increase, companies have no choice and must face the challenges and embrace the opportunities. Navigating the ESG ecosystem can be tricky, but there are practical ways to get started on the journey to responsible growth.

The investor relations and sustainability professionals at this TPB event represented ESG work across Asia Pacific, with companies at different stages of the sustainability journey. The session focused on investor query as an emerging ESG driver, and shared practical insights to address these challenges and identify opportunities.

 

ESG driving investors’ decisions

TPB shared an overview of how ESG issues factor into investment decisions, discussing best practices that inform why and how investors use ESG data. A high proportion of investors in the region who believe that public companies should address ESG issues – a recent survey by Morgan Stanley revealed that 84% asset owners in the Asia Pacific actively consider integrating ESG criteria into their decision-making processes.

For Asian businesses, although many are just starting their ESG programmes, the issues are real and this is particularly true for companies in the Philippines. As TPB Sustainability Advisor Erika Leung Rodriguez cited, the Philippines is the fifth-ranking on the list of 10 Countries Most Affected by climate change (2018 Climate Risk Index). “To set targets that mean something and address the two-degree scenario, companies should have ‘their house’ in order,” she said, referring to analysis and programmes around ESG.

 

Governance and materiality on ESG matter to investors

TPB’s learning session followed with a panel of broad ESG and investor experience, including the investor relations executives of Philippine conglomerate JGSummit Holdings and Hong Kong-based investment holding company First Pacific Corporation who shared their respective journey; and international asset manager Robeco that has long promoted sustainability investing.

Providing an investor viewpoint on how ESG enhances shareholder value, “In Asia we are very conscious of limitations compared with OECD countries when it comes to data disclosures,” said Robeco’s James Fan, Asia Pacific Equities research analyst. “We focus on corporate governance because it is responsible for delivering ESG practices.”

The panel of experts discussed the importance of building the governance structure around ESG – from board level to company operations. In particular there should be governance on the ESG issues that are material, because materiality enables companies to focus on the issues that are truly critical to the business and do that well.

“Investors are looking at the materiality,” Erika further shared on the panel, drawing on her years of experience in global in-house sustainability roles (most recently at Patagonia and International Flavours and Fragrances). “We see the financial impact when we look at what is material. You can talk about all the good things you’re doing, but if these are not material, then these are not useful.”

Making the business case is the first step

The journey has to start with making the business case for sustainability. There are many challenges that companies face when conveying material ESG issues throughout the organisation. During the session, one challenge discussed at length was how to manage the maturity level across various business units or entities.

JGSummit Holdings’ Mike Liwanag described the sustainability strategy development of leading food and beverage company Universal Robina Corporation, its main subsidiary. Having conducted internal benchmarking, stakeholder engagement and materiality assessment that involved a review of ESG progress across its divisions, URC launched their strategy. To date the company is rolling out their KPIs to further embed ESG.

First Pacific’s Chief Investor Relations and Sustainability Officer John Ryan also spoke to this practical challenge, and shared the journey of one of its investee companies “who decided that ESG was going to be their strength not a weakness.” Part of the journey is recognize the value of sharing your learning and inspiring others to act.

The presentations and panel fed insightful questions and energetic conversations amongst everyone present. It was a unique learning event for public companies in the Philippines that demonstrated the importance of ESG for engaging with existing and potential investors.

“We all are seeking to learn from one another,” Pat concluded the day, “so share your stories and your challenges. Investors appreciate when stories are shared, and when you communicate your risks with humility.”

 

The Purpose Business helps clients with ESG reporting and disclosure to navigate what investors are asking and develop their ESG approach. Don’t hesitate to contact TPB.

 If you are interested in joining future TPB events, please join our mailing list.

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