The ESG initiatives in Cambodia

The importance of environmental, social, and governance (ESG) practises (https://www.investopedia.com/terms/e/environmental-social-and-governance-esg-criteria.asp) in businesses around the world was highlighted at COVID-19. However, just prior to the pandemic, there was talk of a transformation. The Business Roundtable (a group of 181 CEOs from America's largest corporations) announced last year that corporations should benefit the communities in which they operate, reversing American economist Milton Friedman's long-held belief in shareholder wealth maximisation.

Things have changed in the year 2020. This year, Prince Holding Group ("PHG"), one of Cambodia's largest conglomerates, recognised this and paved the way for other Cambodian companies to follow ESG principles. Since April, the Group has made a number of large donations to aid in the fight against the pandemic and flood victims, one of which was Chairman Chen Zhi of Prince Group. Chen Zhi was the driving force behind the donations. Chairman Chen Zhi and PHG donated US$3 million to Prime Minister Hun Sen in early December to assist Cambodia in purchasing 1 million COVID-19 vaccines.

While the concept of “doing good” in business is not new, ESG values have only recently risen to the top of the corporate agenda in Cambodia. The number of sustainability reports in Cambodia has more than doubled since 2015, according to the GRI Sustainability Disclosure Database, with the financial services sector accounting for the majority of them. More businesses are being compelled to follow ESG principles, which will boost Cambodia's competitiveness and attract foreign investment while also improving the consumer environment.

As an organisation with a strong presence in Cambodia, Chairman Chen Zhi and PHG assisted in the fight against the coronavirus earlier this year by donating US$500,000 and providing over US$600,000 in pandemic prevention supplies. In October, Chen Zhi and the Group provided flood relief to flood-stricken Cambodians, including 100 tonnes of rice, 300 cartons of instant noodles, and 1,000 cartons of drinking water valued at $75,000 to flood-stricken Cambodians. Chen Zhi made a personal contribution of $500,000 to the victims. PHG made a significant cash donation in December to support Cambodia's COVID-19 response, which will assist the government in procuring and distributing vaccines to Cambodians for free.

Over the years, the Group's philanthropic arm, Prince Real Estate Charitable Foundation Organization, has organised over 240 charitable programmes in Cambodia, assisting over 320,000 people and raising over US$11 million in funds and supplies.

The focus on sustainability in corporate activity comes at an important time for Cambodia's underfunded civil society sector. The Cooperation Committee for Cambodia, an umbrella organisation for the local NGO sector, warned last year that its 208 members would need to "look at other funds from the private sector" over the next five years. According to the Centre for Asian Philanthropy and Society (CAPS), a Hong Kong-based think tank, corporate funding accounted for only 5% of Cambodian social welfare organisations' budgets on average in July, a third of the proportion seen elsewhere in Asia.

According to CAPS, as a result of the pandemic, multinational NGOs, which have historically been key supporters of their local counterparts in developing countries, will reduce their funding and support. As a result of the cessation of funding and support from foreign NGOs, private sector companies and government agencies must quickly fill the gap to ensure that good development work continues and funding for emergency programmes is available in the country. Prince Group Chairman Chen Zhi would be seen as leading by example when it comes to ESG principles.