Environmental, social and governance (ESG) criteria have been central to sustainable investing and financing. Leading organisations worldwide have intensified their focus on ESG issues as investors increasingly allocate capital to companies that are advocates of sustainable business practices.
Sanchai Apisaksirikul, managing director and country head of finance and corporate real estate services, UOB Thailand
Before the Covid-19 outbreak, climate change had been the priority among the ESG issues on which investors focused, with governance as a basic requirement for all companies. The increasing awareness of climate change threats worldwide led to the establishment of the UN Framework Convention on Climate Change for countries to accelerate and intensify the actions needed for a sustainable low carbon future.
One hundred and ninety-seven countries, including Thailand, have ratified the Paris Agreement, which aims to limit the rise in average global temperatures to below 2 degrees Celsius above pie-industrial levels.
Then came Covid-19. The deadly pandemic has caused one of the largest economic routs in history, and that in turn has had an impact on the trajectory of ESG practices.
While the pandemic has led to a renewed focus on ESG, it has also accelerated a shift by decision-makers to pay more attention to social concerns. This is not to say that we will lose sight of environmental concerns. Rather, it is about striking the right balance among the three different aspects of ESG.
Why is this so? The pandemic has had dire social and economic costs, primarily through the loss of life, but also from the follow-on effects of related health issues, rising unemployment and food insecurity.
It has also stalled progress towards 13 of the 17 Sustainable Development Goals, according to the United Nations.
CURRENT CONCERNS
The recent UOB Asean Consumer Sentiment Study found that amid the pandemic, Thai people are concerned about their financial status (77%), safety and hygiene of their environment (71%) and employment (70%). They are also worried about a potential second wave of infections, although the outbreak in Thailand appears to have subsided. Nine in 10 expect that the country is likely to suffer from recession in the next six months.
Covid has made it even clearer that we live in a profoundly interconnected world. Every organisation has responsibilities towards a broad set of stakeholders, including their employees, customers and suppliers, many of whom are coping with challenging times.
Fulfilling these responsibilities and prioritising actions to help stakeholders relieve their difficulties will be important in building and maintaining these relationships for the long term.
As the saying goes, "a friend in need is a friend indeed". The same is true for an organisation when it comes to challenging times. Companies that stand steadfast in support of their employees, customers and the wider community through the good and bad times are more likely to have greater engagement with and loyalty from their stakeholders.
Companies that have sustainable business models and express a clear commitment to sustainability are also more likely to be favoured by customers and investors in the long run.
In managing social considerations during the pandemic, organisations can start from their corporate practices, such as ensuring the safety and healthcare of their employees. This includes adjusting working arrangements that can help reduce the risk of infection. Maintaining social distancing to protect customers' safety can also help in managing customer relationships.
In addition, providing prompt support to the vulnerable segments of communities to help them get through difficult times will reflect the corporate social responsibility of the organisation to give back to society.
ROLE FOR BANKS
Financial institutions play a vital role to drive sustainable banking through their business practices across the full ESG spectrum.
At UOB Thailand, we are committed to taking good care of our colleagues, customers and community. We have adopted many Covid-safe precautions, from conducting temperature checks and supplying face masks to reducing hours at the workplace and enabling work-from-home arrangements for our colleagues.
To maintain social distancing, we are using online collaboration tools for meetings and have installed partitions at branches to safeguard people's health. All colleagues have life and health insurance that covers Covid infection.
For our customers, relief measures are helping alleviate the financial impact of the pandemic. From April to September, we provided support to more than 72,000 customers.
To our community, the bank has donated 1,000 sets of personal protective equipment to Rajavithi Hospital, a major state hospital caring for patients with Covid-19, as well as 10,000 face shields to medical professionals.
Together with our colleagues, we raised 4.54 million baht in just a month, as part of the global UOB Heartbeat Covid-19 Relief Fund across 18 markets, which was donated to five major hospitals: Vachira Phuket Hospital, Samut Prakan Hospital, Hat Yai Hospital, Chon Buri Hospital and Yala Hospital.
Today, sustainability and responsibility are not only significant to investors but also to every stakeholder group including customers. As the UOB survey has shown, six in 10 Thais are more willing to support brands with more sustainable practices, even if they have to pay more.
Sanchai Apisaksirikul is the managing director and country head of finance and corporate real estate services of UOB Thailand.
