Buzzword? ESG is now the byword for sustainable investing

SINGAPORE (July 27): In 2012, local palm oil producers Wilmar International and Golden Agri-Resources experienced first-hand the importance of strong environmental, social and governance or ESG ratings. Norges Bank Investment Management, the asset management unit of the Norwegian central bank, sold all its shares in both companies on concerns about the sustainability of their business models.

Since then, both companies have made significant changes to improve their ESG scores. Golden Agri, for instance, now maps its supply chain all the way to the mills where its palm oil is processed.

Indeed, sustainability is no longer just a buzzword. These days, it is fuelling a multibillion-dollar industry. Companies are under pressure from customers and shareholders to adopt better ESG practices. The requirements range from something as simple as disclosing a CEO’s salary to something as major as changing a business model.

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