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ESG-Related Investments to Grow Amid Fears of Global Recession, Russia-Ukraine Conflict

Fears of a global recession, coupled with the ongoing conflict between Russia and Ukraine, presents an opportunity for investors to look at environmental, social and governance (ESG)-related investments, according to PwC Malaysia deals partner of economics and policy Patrick Tay Soo Eng.

Other investments in Malaysia could be impacted if economic conditions continue to deteriorate amid ongoing uncertainties, but the focus on ESG investments will continue to grow, he told the media after the Malaysian Investment Development Authority's (MIDA) panel discussion on the ESG agenda on Tuesday (Aug 2).

"What I see on the ground is that people may be taking a pause in other investments, but they are planning their projects using ESG as a strategy [going] forward. They see ESG investments as the long-term trend.

"I see investors responding to the current food crisis [amid inflation]. They are thinking about how to restructure their business and make a series of investments [in ESG] to triple productivity to reduce the foreign labour problem and so on.

"For example, if I am under stress, what do I do? I try to cut costs, right. So, ESG strategies are a good way to reduce costs over the long term. I think the smarter investors would focus on that, and that's what we are seeing," he said.

MIDA chief executive officer Datuk Arham Abdul Rahman, in his welcome address, said Malaysian companies are encouraged to embrace ESG elements because they are an increasingly important factor in determining company valuation, as well as investors’ and consumers’ confidence.

“Companies are encouraged to continue embarking on green investments in the country by exploring sustainable investment opportunities in green technology areas, such as renewable energy sources which include solar, biomass, biogas, mini-hydro and other green technology-qualifying activities, such as energy efficiency, green buildings, green data centres and integrated waste management."

From January to March, the government, through MIDA, successfully approved 212 green technology projects and services activities amounting to RM433 million, Arham said.

“[Meanwhile,] from 2001 to March 2022, MIDA approved investments related to green projects and green services amounting to RM35.5 billion, with 3,186 projects in total,” he added.

Source: The Edge Markets

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