ESG on the rise in Malaysia, Singapore, Thailand

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Environmental, Social, and Governance (ESG), until recently more prominent in Europe and the US, is gaining ground in Southeast Asia (SEA). In Malaysia, Singapore, and Thailand, ESG assets are expanding rapidly, driven by a shift in investor and consumer preferences, and also regulatory reforms. A boom in sustainable finance products across the region has meanwhile seen the launch of green bonds, “sustainable loans” and ESG-focused funds.

Growth trajectory of ESG investing in SEA

The Monetary Authority of Singapore (MAS) has introduced green bonds and other initiatives Last year Singapore’s green finance market was worth SGD 22.5bn (USD 16.69bn), as companies issued the bonds in SEA’s environmentally friendly finance hub.

Malaysia’s Islamic green finance integrates ESG and Shariah to attract ethical investors. The country issued MYR 10bn in green sukuk (Islamic bonds) for renewable energy, farming and waste projects, in 2022.

Thailand is increasing renewable energy and reducing waste. The Stock Exchange of Thailand (SET) now encourages listed companies to disclose ESG metrics, and Thai entities are adopting sustainable practices to meet investor and consumer expectations. Local banks are also offering preferential-rate green loans to companies with sustainable projects.

ESG investing in Malaysia, Singapore, Thailand

SEA governments are strengthening ESG policies to increase market transparency and international investment. Since 2021 large Singaporean companies have been required to provide their own climate-impact reports.

Malaysia’s Sustainable and Responsible Investment Roadmap aims to entrench ESG investing and Thailand’s SEC has also issued ESG guidelines.

Two-thirds of SEA’s institutional investors considered ESG central, in a Standard Chartered survey, as per the global trend. The rising demand is driving companies to enhance their ESG reporting and align with global sustainability standards.

Corporate responsibility meets market demand

Southeast Asian consumers and corporate clients are increasingly choosing brands that demonstrate social and environmental responsibility.

Companies in Malaysia, Singapore, and Thailand are responding by setting ambitious carbon reduction targets, improving waste management practices, and enhancing supply chain transparency.

Notably, Malaysian corporations like Petronas and Thai conglomerates like PTT are investing significantly in clean energy and emissions reductions to meet both local and international expectations.

Green loans, bonds offer sustainable finance opportunities

Although Singapore has moved to standardise disclosures, a lack of uniform ESG reporting standards makes comparisons difficult for investors as Malaysia and Thailand develop more cohesive frameworks, limiting cross-border investment and confidence.

SMEs in SEA are also struggling with the associated costs of adopting ESG measures, risking a gap in ESG adoption between them and large corporations.

There are new avenues for growth, however, and financial institutions are innovating with green loans and sustainability-linked bonds.

Last year Thailand’s Kasikornbank introduced sustainability-linked loans with reduced rates for companies meeting their ESG criteria. Moreover, the push for regional ESG standards could see countries develop frameworks tailored to local needs, serving as a model for other emerging markets.

As Malaysia, Singapore, and Thailand embrace sustainable finance practices, they position themselves as attractive destinations for ESG-conscious investors. Despite issues around standardised reporting and SMEs, ESG investing will drive growth and contribute to the global push for sustainable energy.