Australia Tops ESG Performance Rankings for APAC

Australia retained its first place spot in the biennial CG Watch report on ESG performance for APAC, ahead of Hong Kong and Singapore, which tied for second.

The ACGA (Asian Corporate Governance Association) and CLSA Limited have released their 10th biennial CG Watch report on ESG performance in the APAC region.

The ACGA’s report (download) delves into ESG performance and practices by market, ranking the corporate governance standards of 12 APAC markets. Australia retained its first place spot ahead of Hong Kong and Singapore, which tied for second.

“Australia continues to underperform in Government & Public Governance and Regulators, while Hong Kong and Singapore exhibit weaknesses in their public and corporate governance systems that result in lower total scores than expected from the region’s two international financial centres,” the report says.

Taiwan moved up a spot to fourth, amid “concerted effort over the past two years to enhance its corporate governance ecosystem”. Japan moved up two spots to fifth, tied with Malaysia which moved down a spot.

“There has been a marked improvement in ESG standards in Asia over the past two years, but corporate governance mechanisms remain fragmented and connections between CG and ESG policies are unclear, limiting meaningful ESG and sustainability efforts by companies, investors and policymakers,” said Jamie Allen, Secretary General of ACGA.

“These issues need to be addressed in order to provide an effective governance foundation for ESG and sustainability in Asia.”

Meanwhile, CLSA has taken a new approach this year, examining corporate performance through the prism of sector classification, rather than markets. Its report reveals winners and losers by sector and examines how corporate ESG practices have evolved over the past two years.

From a survey of 1,200 Asia-Pacific listed companies, grouped in 13 sectors, CLSA found that the Materials & Capital Goods sector ranked the highest, driven by diversified boards, improving capital structures and a focus on efficiency and emissions.

The Technology sector was a close second, with some major multinationals making “considerable gains”. Healthcare & Pharmaceuticals came in third, followed by Financials & Insurance, which recorded the highest improvement in score amid “a focus on mitigating systemic risks”. Heavy activist action within Autos has driven better governance, giving the sector a fifth place result.

At the bottom of the table, Power & Utilities scored low in Governance but the sector’s commitment to renewable energy and reducing greenhouse gas emissions allowed it higher scores in Environment and Social. Last in the ranking is Conglomerates, confirming that the sector is in need of genuine ESG reform.

“A lack of board diversity and dual CEO/chairperson roles are issues that show room for improvement across multiple sectors,” CLSA said. However, it notes that the findings reveal that region-wide corporate governance practices of listed companies have improved by 8 percent since 2018.

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