The new guidelines provide invaluable advice for this high risk market. They can be expected to improve performance and reduce environmental and social risks, therby supporting investment in this region.
It highlights "three important, cross-cutting risks affecting the Asian equity investment outlook". These are:
1. limited disclosure, which hampers ESG risk assessment;
2. the influence of government ownership and control of many large listed companies in the region; and
3. the effect of globalisation in amplifying ESG risks, especially with regard to China and India.
The Association for Sustainable and Responsible Investment in Asia (ASrIA) has published a report to help investors better assess Asia-specific environmental, social and governance (ESG) risks.
The Taking Stock report identifies "key themes for sustainability investments in Asia" and seeks to fill what ASrIA describes as "a very large analytical gap in the Asian investment literature".
"Investors need a framework for assessing the growing and complex environmental, social, and governance issues that face companies in Asia today. This report begins the process of creating such a framework," said Rachel Kyte at the International Finance Corporation, which financed the report.
"Taken together, the sector reports raise important questions about how to shape investment strategies, reflecting the range of risks and opportunities that sustainability analysis of Asian equities can highlight", the Hong Kong-based association says.