Environmental, social and governance (ESG) data is still regarded as non-financial information that only acts to complement the usual reporting requirements. But there is a growing school of thought that it should be recognised as financial data as ESG issues can materially impact profits in the future, says Keith Lee, sustainable finance engagement manager at the World Wildlife Fund (WWF). In Asia, there is still a belief among some that ESG is not a financial factor, he observes. This is in stark contrast to views in Europe, where climate change and other environmental and social issues are considered material risks to the financial performance of companies. There is also a misconception in Asia that sustainable investing means sacrificing returns and a smaller investment universe. “There is a need for companies and financial institutions to disclose how they’re addressing some of these climate-related risks through their governance, strategy and risk-assessment process, as well as the metrics and targets they are setting,” said Lee.

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