Investing Into Sustainability

For numerous decades, “Sustainability” has often been neglected by organisations striving for the next financial record in order to appease current investors and attract new ones. However, as society begins to collectively focus on environmental and humanitarian efforts, more companies and groups have begun to follow suit.

However, given that organisations should be driven by numbers, what are the metrics used by said companies to gauge how successful (or lacking) they are in their sustainability-focused campaigns?

Enter ESG which stands for Environmental, Social, and Governance, a metric used by investors to screen a company’s behaviour in regards to environmental, social, and governance and as one can clearly tell from the name, there are 3 criteria that are closely observed.

Environment, Social & Governance make up the pillars of ESG

The environmental criteria consider how a company safeguards the environment, including corporate policies addressing climate change. The social criteria examine how it manages relationships with employees, suppliers, customers, and the communities where it operates. Governance deals with a company’s leadership, executive pay, audits, internal controls, and shareholder rights.

While adherence to ESG standards may seem like limiting a company’s potential growth, society today is increasingly more aware and conscious of the policies and actions of companies, especially larger ones who may have a more significant impact on society. One wrong move could result in mass boycotts and negative response from the market, commonly referred to as “getting cancelled” which leads to significant losses.

Thus, ESG investing can help avoid holding companies engaged in risky or unethical practices, leading to long term sustainability not just for the environment and communities but also for the company’s financial growth as a whole.

With the increasing popularity of ESG, there’s been an increase of mutual funds, brokerage firms, and financial advisors similar to PEGH that offer investment opportunities that employ ESG principles, especially to younger investors who only place their money in investments that align with their values.

Resource recycling and carbon footprint are important crucial aspects of ESG

Investment firms that follow ESG investing often have a checklist to gauge the performance of an organisation in their sustainability efforts. For instance, to meet the Environmental criteria, a potential investment company may need to publish a carbon or sustainability report, limit harmful pollutant and chemicals, lower greenhouse gas emissions and carbon footprint, and switch to renewable resources.

Conversely, a Social criteria checklist may include operating ethical supply chains, ensuring workplace safety, not employing child labour, paying fair living wages and having policies protecting against sexual misconduct. Finally, the Governance checklist may require diversity on board of directors, corporate transparency, staggered board elections and CEO excluded from the board of directors.

Many may argue that ESG investing may be a more Western concept. We can clearly see that in Asia the idea of sustainability is becoming a hot button issue. Just recently, the Malaysian government has launched the Malaysia Sustainable Development Goals (SDG) which is an initiative set out to end poverty, protect the environment and climate, and ensure liveable conditions for citizens which has many parallels to ESG investing.

Here to champion that cause is us at PEGH Group. We have rebranded our corporate identity to include helping organisations that have a high impact on society make considerable pushes towards pursuing ESG standards. In our journey, we believe that the many companies that we’re bound to work with are not inherently bad or evil but rather need a guiding hand in building a brighter, sustainable future for the one earth we all share.

While we are still at the early stages in our new journey, we are already beginning to participate and see remarkable progress, especially with our partner at Scanwolf, on using recyclable resources for its very own core product. We are excited to share with you later in greater detail soon. Until then, we hope that you stay tuned and look forward to greater things coming from us at the new PEGH – Stepping Towards Sustainability.

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