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Kuala Lumpur: Companies with good environmental, social and corporate governance (ESG) practices have been more resilient since the start of the Covid-19 pandemic as investors’ growing concerns on damage to the environment have led them to put more value on the effective management of ESG risks.

Bursa Malaysia Bhd chief executive officer (CEO) Datuk Muhamad Umar Swift (pic) said while sustainable finance is still emerging in Asean capital markets, governments and regulators are making some meaningful efforts to promote and support this endeavour.

“The Covid-19 pandemic is widely seen to have given sustainability a further impetus. Millennials and Gen-Z are showing greater concern with respect to sustainability and the changing expectations of businesses’ role in improving society and protecting the environment,” he said in his opening speech at the Asean: Beyond the Pandemic Crisis virtual conference today.

At the regional level, he said key developments included using the Asean Green Bond Standards, the Asean Social Bond Standards and the Asean Sustainability Standards to foster greater transparency and consistency across the region, whereby doing so reduces due diligence costs for investors.

“Preliminary work has also commenced for an Asean taxonomy of sustainable finance. In Malaysia, we have seen the development of the climate change and principles-based taxonomy by Bank Negara Malaysia and the Securities Commission’s SRI (Sustainable and Responsible Investment) roadmap for the Malaysian capital market.

“For Bursa Malaysia, sustainability has always been a significant growth driver, with our approach having considerable influence on the ecosystem – for our public listed companies, investors and capital market intermediaries,” he said.

With several recent listings of companies involved in the renewable energy space, Bursa Malaysia sees a potential growth area, given the increasing priority by consumers and investors on the sustainability front, Umar said.

“These are some of the important steps that will help drive sustainability across the region. We are confident that the integration of sustainability best practices will see a successful transition to a genuinely sustainable economy for the Asean region,” he said.

Meanwhile, during the panel discussion, panellists seemed to agree that there is light at the end of the tunnel with a buoyant market outlook anticipated for Asean, with ESG and technology stocks leading the charge.

During the session, Asean stock exchange leaders and economists shared the view that structural shifts will happen with technology but regulatory frameworks need to be there to bolster any transition to ensure investors’ integrity is in place.

Maybank Kim Eng Group (MKE) CEO Datin Ami Moris said the MSCI Asean Index has been underperforming, with institutional fund flows for both active and passive funds that have, for the most part, turn to net outflow positions.

She said Asean local investors are increasingly looking beyond the perceived old economy exchanges for areas of investment opportunities that are more in sync with their principles as alternatives are now made more accessible.

“But there are also positives, such as our MKE economists projecting buoyant economic growth over the next two years and Asean standing a fair chance of tapping into surging global sustainability assets under management to the likes of US$53 trillion expected to be invested in ESG growth opportunities,” she said.