SAP Sustainability
Introduction Sustainable Concept
Any Organization that upholds strong environmental, social and governance (ESG) standards.
ESG is also referred as socially responsible or ethical - and the key information one need to get started on your journey.
The United Nations (UN) Sustainable Development Goals
Established by the UN in 2015, the Sustainable Development Goals (SDGs) aim to eradicate poverty, protect the earth, and ensure peace and prosperity for all by 2030.
Companies and initiatives that support the SDGs, or generally emphasise environmental, social and governance aspects, present a number of long-term investment opportunities for those looking to contribute to a good cause.
In the ASEAN, an estimated US$200 billion is needed in green investment each year till 2030.
The three criteria used to evaluate companies for ESG investing
Environment
This takes into account the impact a corporation has on the environment. Factors may include carbon footprint, toxic chemicals used in manufacturing, and sustainable processes that form its supply chain.
Social
Social factors look at how the company treats its community, supports human rights and advocates for greater social food in the world. It also takes into account fair practices within the organisation, ranging from gender and racial diversity to hiring and inclusion efforts.
Governance
This looks at business ethics, and the rights and responsibilities of different stakeholders such as the board of directors, managers, and shareholders. Understanding governance risks is critical as unethical corporate practices can cause significant financial and reputational damage.
Socially responsible companies are proven to perform well
If you're concerned about whether financial returns on sustainable investing will match up to other (traditional) investments, you'll be pleased to know that studies have consistently found positive links between companies that do good and their high-performance output.
In fact, the positive impact of ESG investment remains consistent over time, regardless of region or asset type, such as emerging markets, corporate bonds, green real estate, and various Industries across the Globe.
According to the Monetary Authority of Singapore (MAS), evidence indicates that investments that are ESG-aligned reduce exposure to systemic risks and financial market volatility.
Increasing appetite for sustainability
Whether it's heightened awareness of climate issues or a greater understanding of global poverty, income equality and social injustices, investors are increasingly taking steps to be more thoughtful and deliberate in their financial commitments.
And whether you're a new or seasoned investor, passionate about sustainability or newly learning, the COVID-10 pandemic has put environmental and social issues in a harsher light and made us all rethink our values and moral stance.
Whatever the motivation maybe, in the next few years, 46 per cent of investors expect their portfolio to solely comprise sustainable products and initiatives.
The ESG approach
There are several approaches to sustainable investment, including:
Exclusion
Forgo companies and industries that don't align with your personal values and moral code. This can mean excluding sectors dealing with weapons and tobacco, or generally, companies and countries with human rights violations. Putting aside these off-limit areas, you invest as per usual.
Integration
Explicitly analyse environmental and social issues to better pinpoint risks and opportunities and apply these ESG factors to make educated investment decisions. You can use statistical methods to study the link between a company's sustainability efforts and its business performance.
Impact
You invest with the primary objective of producing quantifiable and beneficial environmental or social impact, with the secondary objective of gaining financial returns. With traditional investment, the primary and sole focus is financial gain. Impact-focused investment can apply to sectors such as renewable energy, water treatment or economic empowerment through IT Systems for effective result.
Evaluate what's important to you and your organization
Are you passionate about environmental issues such as air pollution caused by manufacturers or social issues along the lines of LGBTQ+ rights? When you align your investment directions with your own goals and ESG values, you can truly make a meaningful impact.
Strategize and diversify
Do consider different methods of diversifying and managing your portfolio across companies, locations, and industries. Needless to say, read up on the sustainability reports of companies you're considering investing. One of such organization who can help you on the Road map is MILORES.
In Singapore, it is mandating sustainability reporting from listed companies - requiring them to report performance indicators and board statements - sustainable investing has been made easier for corporate investors, whether you're selecting you own or with the support of IT Systems such as SAP or other platform, we MILORES will help you in different stages at various level to achieve your organisational sustainability goal.
Please reach us to have further discussion and move forward to the next level.