In recent years, ESG (Environmental, Social, and Governance) investing has become a significant focus in the financial world. However, its effectiveness and implementation have been subjects of debate and scrutiny. ESG’s goal to enhance capital efficiency and combat climate change is admirable, yet it faces three core challenges:

  1. Lack of Cohesive Direction: ESG combines a diverse array of goals, leading to confusion for investors and businesses about making necessary trade-offs.
  2. Misrepresented Rewards: There’s often a discrepancy between expected and actual rewards in ESG investing.
  3. Inconsistent Measurement: ESG scoring methods vary significantly, leading to potential manipulation.

To address these issues, a reevaluation of the ESG framework is essential. Focusing separately on Emissions, Supply Chains, and Governance can offer more clarity and effectiveness.

  • Emissions: The primary driver of global warming, requiring immediate attention and action in investment strategies.
  • Supply Chains: Most environmental impacts occur here. It’s crucial to manage and report these impacts, especially Scope 3 emissions, which are indirect and challenging to control. Transparency and collaboration are key.
  • Governance: Think of modern-day guilds - self-governing bodies ensuring corporate responsibility and advocating for decarbonization.

The Path Forward:

  • Technology: Blockchain can aid in transparency, providing a reliable way to validate environmental claims.
  • Collaboration: Businesses, especially large corporations, must lead in greening the supply chain, leveraging their resources and influence.
  • Government Role: Policymakers should create incentives for low-carbon technology investments and support renewable energy adoption.
  • Financial Institutions: They should facilitate transparent, efficient financing and transactions for green initiatives.
  • Regional Cooperation: Particularly in Northeast Asia, sharing best practices and private-sector engagement is crucial.

The Asia Pacific Energy Transition Readiness Index reveals a disparity between perception and reality in carbon emissions. Despite progress in some areas, overall emissions are increasing due to strong economic growth and energy demands.

Conclusion:

The business community must be a unifying force, bridging conflicts and leading the charge in sustainable practices. By refining our approach to ESG, we can make a tangible impact on our world’s future. Let’s unite in transforming ESG from a buzzword into a blueprint for real change.

About the Forum

Title: “2022 Jeju Forum: Beyond Conflict, Towards Peace - Focus on International Finance and Northeast Asian Cooperation”

Date: September 14-16, 2022

Location: International Convention Center Jeju, Jeju, Republic of Korea

The 2022 Jeju Forum, under the theme “Beyond Conflict, Towards Peace: Coexistence and Cooperation,” is set to explore critical global financial challenges and opportunities for collaboration in Northeast Asia.

Key Discussions:

  1. Global Financial Shifts: Analysis of the pivotal changes in international finance in 2022, including the end of long-term low interest rates and the impact of the strong dollar on global economies.

  2. New Cold-War Dynamics: Examining the geopolitical tensions arising from the Russian invasion of Ukraine and its effects on the economic relationship among Korea, Japan, and China.

  3. Consumer Finance Trends Post-Pandemic: Understanding the shift in financial product consumption, especially among millennials and Gen Z, towards digital platforms.

  4. ESG and Sustainable Finance: Discussing the urgent need for finance to lead in addressing environmental, social, and governance issues, particularly in the context of climate change and carbon emission reduction.

  5. Emerging Technologies in Finance: Delving into the impact of blockchain, cryptocurrencies, CBDC, cyber terrorism, and the monopoly of consumer data by big tech companies.