Materiality of Asia: Investing away from climate risk

Executive summary

Across Asia’s diverse corporate landscape, a material understanding of what constitutes climate risks remains lacking, and this has potential implications on how well businesses are able to adapt to climate change. The report discusses how companies in Asia can better understand, and manage, climate-related risks and opportunities.

This report, produced in collaboration with the Economist Intelligence Unit (EIU), is based on in-depth interviews with subject matter experts from the ESG space, and features contributions from Fullerton.

  • Companies in Asia broadly understand the impact that climate change can have on business operations and supply chains. However, the quality of Environmental, Social and Governance (ESG) reporting in Asia remains uneven across geographies and industries.
  • Increasingly, asset owners are demanding more insight into corporate operations to better gauge material impacts on financial performance and want to see risks accurately reflected in ESG rankings and reporting.
  • Consensus around what constitutes material climate impact has grown in the investment industry, thanks largely to the work of the Task Force on Climate-Related Financial Disclosures (TCFD). However, best practices on how companies should measure climate impacts and report them are still developing.
  • Asset owners and asset managers, through the power of market consensus, are well-positioned to convince companies that disclosing climate impacts is important not just for regulatory compliance, but also for the most material metric: attracting investment.
  • Companies with a material understanding of climate risks and opportunities are better able to incorporate them into their risk management and strategic planning, and to build more sustainable enterprises in the long run.

At Fullerton, we are committed to putting ESG at the heart of what we do. We have been strengthening our ESG capabilities, and aligned corporate goals to match our commitment to sustainability.