Home � PRRES Inc. Journal � Read the Journal

Assessing the Implementation of Environmental, Social and Governance (ESG) by Southeast Listed Property Companies

Author/s: Ain Farhana Jamaludin, Muhammad Najib Razali

Date Published: 18/11/2024

Published in: Volume 29 - 2024 Issue 2 (pages 30 - 65)

Abstract

This study investigates the integration of Environmental, Social, and Governance (ESG) principles in Southeast Asia's real estate sector, focusing on how these principles are embedded into corporate strategies for sustainable development. It provides an understanding of ESG practices among the top listed property companies in Malaysia, Singapore, Indonesia, Thailand, and the Philippines, exploring the factors driving ESG adoption and the challenges faced in this region. Utilising a mixed-methods approach, the research analyses data from the annual reports of the top 10 listed property companies in each country, examining their ESG disclosures and practices. An ESG matrix evaluates each company's performance across environmental, social, and governance criteria. Principal component analysis (PCA) and rank correlation techniques assess the relationship between ESG performance and market value. The findings indicate a growing trend towards ESG integration in Southeast Asia, with Singapore and Malaysia leading due to robust frameworks and government initiatives. Other countries like Indonesia, Thailand, and the Philippines are progressing but face challenges such as policy fragmentation and data scarcity. The study highlights the importance of comprehensive ESG strategies for sustainable growth and provides valuable insights for policymakers, investors, and stakeholders in a region often underrepresented in global ESG discussions.

Download Full Article

Download the Full Article PDF

Assessing-the-implementation-of-environmental-social-and-governance-ESG-by-Southeast-Asian-listed-property-companies.pdf (710kB)

Keywords

Esg - Listed Property Companies - Principal Component Analysis (Pca) - Southeast Asia

References

Aldowaish, A., Kokuryo, J., Almazyad, O., & Goi, H. C. (2022). Environmental, Social, and
Governance Integration into the Business Model: Literature Review and Research Agenda.
MDPI AG. https://doi.org/10.3390/su14052959
Ali, A. (2022). Economic impact of ESG practices in Southeast Asia. Journal of Sustainable
Finance, 14(2), 112-128.
Almeyda, F., & Darmansyah, A. (2019). Sustainability integration in Thailand's real estate
sector: A focus on environmental and social governance. Journal of Real Estate Sustainability,
25(2), 102-115.
Angelova, D., Bosello, F., Bigano, A., & Giove, S. (2021). Sovereign rating methodologies, ESG
and climate change risk: an overview. In SSRN Electronic Journal. Elsevier BV.
https://doi.org/10.2139/ssrn.3841948
ASEAN-Japan Centre. (2018). Increasing ESG adoption in Southeast Asia. Retrieved from
https://www.asean.or.jp
Balatbat, M., Siew, R. Y. J., and Carmichael, D. G. (2012), ESG scores and its influence on firm
performance: Australian Evidence, Australian School of Business of Accounting, Vol.2,pp.1-
32
Baratta, A., Cimino, A., Longo, F., Solina, V., & Verteramo, S. (2023). The Impact of ESG
Practices in Industry with a Focus on Carbon Emissions: Insights and Future Perspectives. In
Sustainability (Vol. 15, Issue 8, p. 6685). MDPI AG. https://doi.org/10.3390/su15086685
Bauer, R., Eichholtz, P. M. A., Kok, N., & Peneda Saraiva, P. (2010). Environmental
Performance: A Global Perspective on Commercial Real Estate. In SSRN Electronic Journal.
Elsevier BV. https://doi.org/10.2139/ssrn.1557409
Bauer, R., Eichholtz, P., Kok, N., & Quigley, J. M. (2011). How green is your property portfolio?
The global real estate sustainability benchmark. Rotman International Journal of Pension
Management, 4(1), 34-43.
Beebe, C. (2016). Corporate water management strategies: Emphasizing conservation and
wastewater treatment. Water Resources Management, 30(4), 1201-1215.
Berliner, D. (2015). Corporate responsibility in global supply chains: Ensuring ethical labour
practices and human rights compliance. Journal of Business Ethics, 29(2), 147-161.
Bright, J. (2020). Corporate human rights due diligence: Preventing involvement in abuses and
safeguarding communities. Human Rights Law Review, 45(1), 203-221.
Cajias, M., Fuerst, F., McAllister, P. and Nanda, A., (2011) Is ESG commitment linked to
investment performance in the real estate sector? Working Papers in Real Estate and Planning.
08/11. Working Paper. University of Reading, Reading. pp37.
Cloutier, D. (2020). The new norm: ESG as a material risk and opportunity for real estate. CRE
Real Estate Issues, 44(16), 1-7.
Divecha, A.B., Drach, J. and Stefek, D. (1992) Emerging Markets: A Quantitative Perspective,
Journal of Portfolio Management, 19, 1, Fall, 41-50.
Dvinskikh, S. (2021). Sustainable water use in corporations: Managing water footprints in arid
regions. Journal of Sustainable Water Resources, 42(2), 89-105.
Eccles, R.G., Ioannou, I., & Serafeim, G. (2012). The Impact of Corporate Sustainability on
Organizational Processes and Performance. SRPN: Green Investment (Topic).
Edmans, A. (2017). Executive compensation and company performance: Aligning interests
with shareholders. Financial Management Review, 11(2), 33-55.
Falendra Kumar Sudan. (2020). Challenges in ESG adoption in Southeast Asia: A comparative
study with Australia, Europe, and North America. Journal of Environmental Governance,
31(4), 77-90.
Falkenbach, H. (2010). Evaluating environmental impacts in line with ESG standards:
Focusing on ecosystems and biodiversity. Journal of Sustainable Development, 15(3), 87-99.
Fung, A. (2014). Corporate transparency and disclosure in governance: Essential for informed
decision-making. Journal of Corporate Governance, 18(4), 59-78.
Galbreath, J. (2013), ESG in focus: The Australian evidence, Journal of Business Ethics, Vol
118 No 3, pp. 529-541
Gasbarro, F. (2016). Enhancing corporate resilience to climate change: Strategies and best
practices. Journal of Business and Environmental Studies, 22(4), 234-248.
Gebrayel, M. (2018). The role of the audit committee in financial integrity and risk
management oversight. Accounting and Finance Journal, 12(3), 76-91.
Ghazali, N. (2023). Profitability and ESG integration in ASEAN market. Asian Journal of
Environmental and Social Governance, 19(3), 85-102.
Gilberto Gomes, S., & Fabio Henrique, P. (2022). ESG (Environmental, Social and Governance)
in construction civil: concept that can contribute to the sector. Annals of Civil and
Environmental Engineering (pp. 064065). Heighten Science Publications Corporation.
https://doi.org/10.29328/journal.acee.1001043.
Global Sustainable Investment Alliance (GSIA). (2016). 2016 Global Sustainable Investment
Review. Retrieved from https://www.gsi-alliance.org
Godswill, I. (2020). Corporate waste management strategies and their impact on
environmental pollution. Journal of Environmental Protection, 11(5), 123-135.
Hannah, M., Sharma, R., & Qiu, L. (2021). Market value and ESG adherence: A study of
Southeast Asian real estate companies. Journal of Corporate Finance, 45(5), 210-226.
Hassan, S., Miller, R., & Zamora, M. (2021). Post-COVID ESG trends in the Philippines:
Improving corporate responsibility and governance. Asian Business Review, 38(3), 67-82.
Humphrey, J. E. (2011), The Independent Effects of Environmental, Social and Governance
Initiatives on the Performance of UK Firms, Australian Journal of Management, Vol 37 No 2,
pp. 135-151.
Iskandar, M., Nelson, D., & Tehrani, F. M. (2022). Managing Sustainability and Resilience of
the Built Environment in Developing Communities. CivilEng (Vol. 3, Issue 2, pp. 427441).
MDPI AG. https://doi.org/10.3390/civileng3020025
Itam, U. (2018). Corporate treatment of employees: Assessing fair wages, working conditions,
and anti-discrimination policies. International Journal of Human Resources and
Development, 36(1), 101-115.
Jernelius, S. (2011). Kan grönt bli till guld?: En studie av miljöcertifieringars värde och
utveckling i den svenska bygg-och fastighetssektorn
Jhunjhunwala, S. (2011). Transparency in corporate governance: A key factor for stakeholder
engagement. Journal of Business Governance, 22(1), 33-45.
Jinga, P. (2021). The Increasing Importance of Environmental, Social and Governance (ESG)
Investing in Combating Climate Change. In Environmental Management - Pollution, Habitat,
Ecology, and Sustainability. IntechOpen. https://doi.org/10.5772/intechopen.98345
Jones, R. (2004). Recycling and waste reduction in corporate settings: Assessing environmental
outcomes. Waste Management and Research, 22(2), 87-99.
Kanchan, S. (2016). Corporate risk management: Evaluating frameworks and strategies for
mitigating risks. International Journal of Risk Management, 14(3), 94-110.
Keong, C. Y. (2016). Economic Growth, Sustainable Development and Ecological Conservation
in the Asian Developing Countries: The Way Forward. Topics in Biodiversity and
Conservation (pp. 239283). Springer International Publishing. https://doi.org/10.1007/978-3-
319-26161-4_16
Kim, H.-D., T. Kim, Y. Kim, and K. Park (2019). Do long-term institutional investors promote
corporate social responsibility activities? Journal of Banking and Finance 101, 256269.
Kiruthika, K. (2020). Corporate Social Responsibility: Environmental stewardship,
philanthropy, and ethical business practices. CSR Review, 15(1), 75-92.
Korwatanasakul, U. (2021). The benefits of ESG for firms in Southeast Asia: A financial
perspective. ASEAN Economic Bulletin, 38(1), 56-75.
Larsen, T. (2010). Implementing ESG in private real estate portfolios: the case of US and paneurope core fund managers. Journal of Sustainable Real Estate, 2(1), 249-267.
Li, Y., Li, S., Xia, S., Li, B., Zhang, X., Wang, B., ... & Zheng, W. (2023). A review on the policy,
technology and evaluation method of low-carbon buildings and communities. Energies, 16(4),
1773.
Liang, H., & Renneboog, L. (2017). On the foundations of corporate social responsibility. The
Journal of Finance, 72(2), 853-910.
Lim, L.C (2000) Property Investor Behaviour and Perceptions of Investment in Southeast Asia
with Particular Reference to Singapore, Presented at the Doctoral Seminar at the ARES Annual
Meeting, Santa Barbara California.
Lizieri, C. (1992). The property crisis: international investment criteria. Estates Gazette, 9227,
110-111
Lizieri, C., Worzala E. and Johnson, R. (1998) To Hedge or Not to hedge? A study of
international real estate under exchange rate uncertainty, The Royal Institution of Chartered
Surveyors, June.
Loc, D. (2020). The evolution of ESG strategies in Southeast Asia's economic policies. Journal
of International Business and Economics, 27(4), 144-159.
Lokuwaduge, C. S. D. S., & Heenetigala, K. (2017). Integrating Environmental, Social and
Governance (ESG) Disclosure for a Sustainable Development: An Australian Study. Wiley.
https://doi.org/10.1002/bse.1927
Maidin, A. J. (2012). Environmental Protection in Land Use & Development Control
System in Malaysia. SSRN Electronic Journal. Elsevier BV.
https://doi.org/10.2139/ssrn.2015082
Maizatun Mustafa, M.(2018). Indicators for Sustainable Development: Understanding the
Criteria for a Successful Sustainability Relevant to Environmental Law in Malaysia. In
International Journal of Engineering & Technology (Vol. 7, Issue 3.30, p. 141). Science
Publishing Corporation. https://doi.org/10.14419/ijet.v7i3.30.18216
Mallin, C. (2012). Shareholder rights and corporate governance: The role of voting and
engagement in management decisions. Journal of Corporate Governance, 20(3), 45-63.
Manongdo, F. (2018). Thailands ESG Initiatives: Mandatory Reporting and Sustainability
Efforts. Retrieved from https://www.senecaesg.com
Martin, C. (2018). Diversity in corporate boards: Gender, ethnicity, and structural
independence in governance. Journal of Board Governance, 23(1), 21-39.
Martinez, F. (2019). Ensuring product safety and corporate accountability: Adherence to
health and safety standards. Journal of Consumer Safety, 9(3), 89-104.
Matos, P. (2020). ESG and Responsible Institutional Investing Around the World: A Critical
Review. In SSRN Electronic Journal. Elsevier BV. https://doi.org/10.2139/ssrn.3668998
Melnyk, S. (2003). The role of hazardous waste management in corporate sustainability.
Journal of Hazardous Materials, 25(4), 43-58.
Meshcheryakova, T. (2022, March). Development of Green Building Standards in the
Context of Global ESG-transformation. In International Scientific and Practical Conference"
Young Engineers of the Fuel and Energy Complex: Developing the Energy Agenda of the Future"(EAF
2021) (pp. 188-194). Atlantis Press.
Miller, R., Hassan, S., & Delos Santos, A. (2021). ESG performance of real estate companies in
the Philippines: Environmental and social excellence amidst governance challenges.
Philippine Journal of Business and Management, 19(2), 112-130.
Morciano, P. (2016). Implementing conflict of interest policies in corporate governance.
Corporate Ethics Journal, 18(2), 77-88.
Moss, M. (1996). Malaysia: Managing the Environment in a Rapidly Developing Society. In
the GeoJournal Library (pp. 291-306). Springer Netherlands.
Newell, G. (2023). Real Estate Insights The increasing importance of the S dimension in ESG.
Journal of Property Investment & Finance (Vol. 41, Issue 4, pp. 453459). Emerald.
https://doi.org/10.1108/jpif-01-2023-000
Newell, G., Nanda, A., & Moss, A. (2023). Improving the benchmarking of ESG in real estate
investment. Journal of Property Investment & Finance (Vol. 41, Issue 4, pp. 380405).
Emerald. https://doi.org/10.1108/jpif-10-2021-0084
Onstwedder, F., Pietersma, F., & Varacca, M. (2021). Measuring and mitigating corporate
carbon footprints: Strategies for reducing greenhouse gas emissions. Journal of Environmental
Management, 28(3), 142-160.
Ortas, E., Alvarez, I., Jaussaud, J., and Garayar, A. (2015), the impact of institutional and
social context on corporate environmental social and governance performance of companies
committed to voluntary corporate social responsibility initiatives, Journal of Cleaner
Production, Vol 108 2015, pp. 16-28.
Paul, L. C., Suman, A. A., & Sultan, N. (2013). Methodological analysis of principal component
analysis (PCA) method. International Journal of Computational Engineering & Management, 16(2),
32-38.
Pham, J., Tan, W., & Chew, K. (2019). Environmental and governance practices in Singapore's
real estate sector: Biodiversity and policy challenges. Singapore Real Estate Journal, 22(3), 98-
110.
Phokchai, S. (2021). ESG integration in Thailand's real estate sector: A focus on governance
improvements. Thai Journal of Business and Economics, 24(2), 89-105.
Phokchai, T. (2021). How can investing in ESG stocks reduce risk?.
https://www.setinvestnow.com/th /knowledge/article/69-how-esg-stock-investment-reducesrisks
Phoorisart, N. (2017). Sustainability Awareness in Thailand. Sustainability, Green IT and
Education Strategies in the Twenty-first Century (pp. 103147). Springer International
Publishing. https://doi.org/10.1007/978-3-319-57070-9_6
PRI (Principles for Responsible Investment). (2016, February 25). Sustainable real estate
investment: Implementing the Paris Climate agreement an action framework. London: PRI
Association.
Qian, L. (2021). Waste management in the corporate world: Strategies for recycling and
pollution control. Environmental Science and Technology, 33(1), 112-125.
Qiu, L., Hannah, M., & Sharma, R. (2021). ESG adherence and market performance: The case
of Southeast Asian real estate companies. Journal of Property Investment & Finance, 39(4),
123-141.
Ram, S. (2023). Finding The Right Balance.
Roque, M. (1985). Historical perspectives on corporate governance in Southeast Asia.
Economic Review, 12(3), 201-215.
Royal Institution of Chartered Surveyors (RICS). (2009). Sustainable energy strategies:
Reducing corporate reliance on non-renewable energy sources. RICS Research Report.
Retrieved from https://www.rics.org
Ruhaya, A., Norhayati, M. A., & Wan Nordin, W. S. (2016). The impact of environmental,
social, and governance (ESG) disclosures on corporate performance: Evidence from Malaysian
firms. Asian Journal of Business and Accounting, 9(1), 65-97.
Sahoo, P., & Kumar, R. (2023). Sustainability practices in Malaysia's real estate industry:
Addressing biodiversity and board diversity gaps. Malaysian Journal of Sustainable Business,
12(1), 35-49.
Salvi, M., Schneider, M., & Geissler, R. (2008). Energy efficiency and renewable energy in
corporate sustainability strategies. International Journal of Energy Research, 32(4), 123-140.
Sharma, R., Hannah, M., & Qiu, L. (2020). Real estate market value and ESG adherence in
Southeast Asia: A comparative analysis. Journal of Sustainable Finance & Investment, 10(4),
88-101.
Sharmin, T. (2014). Corporate engagement in local communities: Charitable activities and local
development. Journal of Social Responsibility, 12(4), 115-129.
Simpson, N. P., & Basta, C. (2018). Sufficiently capable for effective participation in
environmental impact assessment?. Environmental impact assessment review, 70, 57-70.
Stechemesser, K. (2015). Corporate strategies for climate change mitigation and resilience.
Climate Policy and Business, 10(2), 45-59.
Themistocleous, M. (2018). Assessing customer interactions: Product quality, pricing, and data
privacy in corporate governance. Journal of Business Ethics, 27(3), 112-125.
Tisdell, C. A. (1996). Sustainable Development and Environmental Conservation: Major
Regional Issues with Asian Illustrations.
Tsalis, T. (2020). Corporate environmental risk management and regulatory adherence: A
focus on stewardship and compliance. Journal of Environmental Governance, 24(1), 52-66.
Tzar, P. (2023). ESG and economic performance: A critical analysis of ASEAN firms. Business
and Environmental Review, 21(5), 67-89.
United Nations Human Settlements Programme (UN-Habitat). (2009). Harmonizing ESG
criteria for sustainable development. Retrieved from https://unhabitat.org
Vendries, J. (2020). Assessing the environmental impact of products through lifecycle analysis:
Sustainable packaging and recyclability. Environmental Product Life Cycle Review, 18(3), 98-
115.
Voland, N., Saad, M. M., & Eicker, U. (2022). Public Policy and Incentives for Socially
Responsible New Business Models in Market-Driven Real Estate to Build Green Projects.
MDPI AG. https://doi.org/10.3390/su14127071
Weber, M. (2013). Corporate ethical practices: Adherence to laws, anti-corruption policies, and
the enforcement of ethics codes. Journal of Business Ethics, 24(2), 101-120.
Wieser, A. A., Scherz, M., Maier, S., Passer, A., & Kreiner, H. (2019). Implementation of
Sustainable Development Goals in construction industry - a systemic consideration of
synergies and trade-offs. In IOP Conference Series: Earth and Environmental Science (Vol.
323, Issue 1, p. 012177). IOP Publishing. https://doi.org/10.1088/1755-1315/323/1/012177
Wimmer, M. (2013). Evaluating the ESG performance of publicly listed real estate companies:
An analysis of corporate sustainability in the real estate sector. Journal of Sustainable Real
Estate, 5(1), 23-41.
Xu, Y. (2020). Green technology innovations and corporate environmental responsibility.
Green Innovation Review, 14(2), 88-102.
Xu, Y. (2020). Research and development in green technologies: Innovations reducing
environmental damage. Green Innovation Review, 14(2), 88-102.
Yang, R. (2020). Credit Ratings in the Age of Environmental, Social, and Governance (ESG). In
SSRN Electronic Journal. Elsevier BV. https://doi.org/10.2139/ssrn.3595376
Ye, C., & Ming, T. (2023). Land use carbon emissions estimation and carbon emissions control
strategy effect scenario simulation in Zhejiang province. Heliyon, 9(11).
Zarządzania, A. (2022). Governance structures and sustainability: Integrating ESG issues into
strategic decision-making. Journal of Sustainable Governance, 28(4), 98-114.
Zeng, W. (2022). Environmental practices in corporate supply chains: Sustainable sourcing
and procurement policies. Journal of Sustainable Supply Chain Management, 31(5), 120-134.
Zeng, W. (2022). Environmental practices in corporate supply chains: Sustainable sourcing
and procurement policies. Journal of Sustainable Supply Chain Management, 31(5), 120-134