REFINITIV ESG RATINGS OF BUILT ENVIRONMENT COMPANIES IN SINGAPORE AND ITS IMPACT ON FINANCIAL PERFORMANCE

Abstract

Sustainability has never been more important than today with the ever-increasing frequency of extreme weather, social issues, and general instability plaguing the world. It has fuelled interest in sustainability through a plethora of channels including employees, businesses and investors. For these stakeholders, environmental, social, and governmental (ESG) data is a resource increasingly used in an individual or organisation’s analysis process as non-financial factors in identifying risks and growth opportunities. To experience these growths and to improve investor confidence, organisations invest in initiatives with regards to ESG issues. Hence, financial performances of businesses will certainly be affected. Although there have been studies on the topic, studies in relation to the built environment industry specific to Singapore are nonetheless limited. This research paper analyses the correlation between ESG performances of built environment companies through the Refinitiv database and financial performance, as well as the effects of COVID-19 on financial and ESG performance. The built environment companies involved in this study consist of the companies listed on the Singapore Stock Exchange (SGX) with available ESG data. The financial metrics involved consist of companies’ Return of Assets (ROA) and Return of Equity (ROE). Overall findings suggest that ESG performances do not significantly impact financial performance apart from results in 2020, potentially hinting at negative significant impacts from COVID-19. Further analysis then reveals that COVID-19 does in fact impact financial performance significantly in a negative way, and possibly ESG ratings as well. These results could assist corporate management and investors in their decision making processes with regards to ESG.