ators, have been responding by throwing more resources at it to satisfy the demand. One might think, of course, that if ESG was so important to consumers and that their decisions were sobiased toward firms with high ESG ratings, then investment funds that focus on those same firms wouldbe getting higher cash inflows and higher returns than those that didn’t. This turns out not to be true. Sowhat is going on? Part of the disconnect is that there are widespread doubts about the accuracy, not to mention thesincerity, of a lot of the company ESG reports. And there are also doubts about how much the ESG fundmanagers are genuinely able to compare ESG performance across companies because of the absence ofa consistent rating system. Still, the push from regulators is getting stronger and the costs of compliance are escalating. According to recent reports, the head of the SEC, which polices the US financial exchanges, says the cost of regulatory reporting by the approximately 4,300 companies under its oversight could quadruple this year, to $8.4 billion, as more stringent ESG requirements are implemented. The SEC has about 4,300 companies under its purview, so what you are looking at is an average spend per company of almost $2 million per year to meet the reporting requirements. Now don’t forget that these documents are drawn up primarily by lawyers, and the $8.4 billion figure is based on an hourly rate of $600. At that. you could pay the household electricity bills, even in Australia. One of the companies affected by these requirements is Singapore-based superapp Grab Holdings,which is listed on the Nasdaq exchange. Given that Grab is still unprofitable and operates in a businesswith serious environmental and human impacts, its ESG reporting burden is material. Grab, in its mostrecent quarterly financial report, for the first quarter of 2023, says it lost another $250 million on top ofthe $1.74 billion it lost in 2022. For these reasons, its ESG reports make for particularly interestingreading. Singapore itself, where Grab started and is still headquartered, is highly regulated and businesses likethe one Grab excels in — online meal delivery and ride-hailing — are subject to rules that are well enforced. This is not the case in some of Grab’s other areas of activity in Southeast Asia, which takes in Malaysia, Thailand, Philippines, Myanmar, Cambodia, Indonesia and Vietnam. Not only is the regulatory framework not as well developed in most of these countries but enforcement of the rules that exist is very patchy, and statistics on things like accidents and road safety violations are patchier still. This makes ESG more problematic. A look at Grab’s ESG reporting Grab’s latest annual ESG report, for 2022, is an imposing 74 pages long. A good part of it consists of theusual marketing fluff one sees in company presentations, like large photos of the company’s drivers who can’t stop smiling because they are so happy to be part of the organisation. In some respects they certainly should be smiling. Their incomes are increasing — average earnings per active hour for drivers increased by 10 per cent in 2022 over 2021 — partly due to a meaningful reduction in idle time enabled by technology-driven efficiency improvements. That isn’t the only reason to wear a grin. Grab says it has more than five million drivers on its books and 72 per cent of them earn from more than one service, meaning that they can cross over from food delivery to ride-hailing and vice-versa. In the non-fluffy parts of the report, Grab gives us five pages on road safety, eight on greenhouse gas emissions, just one on air quality, four on food packaging waste and eight on inclusiveness. The company’s spiel on road safety is of special interest, since Southeast Asia’s roads have a deservedly deadly reputation for motorcyclists, and most of Grab’s food delivery business is made by two-wheelers. Moreover, in order to meet tight schedules, make more deliveries and make more income, it is the food delivery drivers themselves who create much of the mayhem. For example, a study by the Malaysian Institute of Road Safety Research found that 70 per cent of food delivery motorcyclists drivers transgressed against traffic rules during delivery, including illegal stopping, running red lights, talking on the phone while riding, riding in the wrong direction, and making illegal U-turns. In neighbouring Thailand, where a motocyclist dies on the road every 30 minutes or so, these and other transgressions by food delivery riders, such as speeding, lane-weaving and riding on footpaths, are readily observable. It is therefore surprising to read in Grab’s ESG report that there is only just under one accident for every million rides involving a Grab delivery driver. Of course, low as this number sounds, it is difficult to get an accurate perspective on it since accidents are expressed ‘per ride’ rather than standardised as in ‘per kilometre’, and in road accidents involving hazardous behaviour by delivery riders, there is usually more than just the rider who gets hurt. Further, the accident numbers don’t include moving violations that are dangerous but don’t end in collisions. In countries like Thailand, where enforcement of traffic laws is the exception rather than rule, dangerous driving by two-wheelers is famously off the charts. If the data provided by Grab is accurate and its drivers are involved in a miniscule number of mishaps, then its competitors must be absolutely shocking, but casual observation suggests that there is little difference across delivery companies. Studies based on actual rider surveys have reported accident rates that are appalling. One 2021 survey of food delivery drivers in Thailand found that 66 per cent of the more than 1,000 respondents had been in one or more accidents while working and that multiple crashes was alarmingly common, with some riders reporting more than five. Other studies, including a survey by the Institute of Policy Studies at the National University of Singapore in 2022 also found a high incidence of accidents among food delivery drivers. And at one point the Chinese government was sufficiently horrified by the number of accidents involving food delivery riders that it jacked up the penalties, first on the drivers themselves, then later on the platforms they worked for. The big questions about ESG reporting This writer was on the road in mid-July on his own motorbike when he saw again what he’s seen manytimes before: a food delivery rider for Lineman in Ban Chang, near the provincial city of Rayong, cleaningup another motorcyclist at high speed trying to get his order to the customer. This time, incredibly, noone was injured, just shaken up. The bikes themselves were a mess, one lying in the middle of the roadand the other at the side, while a civilian directed traffic passed the wreckage. This incident, like countless others, will not be entered into any statistics, either the company’s nor even the police records. So these ESG reports throw out some big questions. First, is the same technology that improves driver efficiency also pushing them beyond the limits of safety in real-life conditions? Second, how accurate are Grab’s own road safety statistics and how well do they give us the whole picture of the competency of their drivers? Third, if the road safety data is questionable, then can the company information relating to other ESG issues be trusted? Fourth, the broader question: are these ESG reports worth the paper they are printed on? Are they actually misleading consumers and investors rather than informing them? And fifth, should the regulatory burden be relaxed rather than made more stringent, given the astronomical costs of compliance? The lawyers, at least will be hoping that the ESG show goes on.