Sustainable investing the new standard

Given new ratings and scrutiny from investors and institutions, listed firms need to prioritise ESG factors

- Nuntawun Polkuamdee

ESG investing is more than just a trend many expect it to become the new standard.

The strategy is considered sustainable, measuring environmental, social and governance (ESG) factors to judge an investment's financial returns and impact.

Environmental factors can include carbon emissions, waste management and sustainability efforts. Social factors involve employee treatment, workplace diversity and community relations. Governance factors value leadership decisions, transparency and business ethics.

With growing investor interest and regulatory support, ESG investing is becoming a mainstream approach to building sustainable and profitable portfolios. Research suggests ESG-focused investments often outperform traditional ones, offering competitive returns with less risk.

At the Stock Exchange of Thailand (SET), ESG investment is being prioritised and support is provided to listed companies to align with international ESG standards.

Many Thai listed companies received global ESG scores and emerged as industry leaders, recognised by S&P Global's Sustainability Yearbook 2025, which evaluates and awards companies for outperforming their peers in sustainability.

GROWING POPULARITY

Global ESG fund investments have been increasing, with assets under management now exceeding US$40 trillion, according to Bloomberg. Reports from Morningstar and MSCI indicate ESG funds tend to outperform conventional funds in the long term.

During the pandemic, global ESG funds recovered more quickly than the overall market. Research from Harvard Business Review suggests ESG stocks exhibit lower volatility and offer stable returns during market downturns.