In today’s rapidly changing world, investors are no longer evaluating companies solely on their financial performance. Environmental, Social, and Governance (ESG) factors have become central to investment decisions, reshaping the financial landscape globally. Setareh Heshmat, Director of ESG Investments at a leading venture capital firm in Singapore, has been at the forefront of this transformation. With over a decade of experience in finance and sustainability, she believes ESG is not just a trend—it is the future of smart investing.

Why ESG is Gaining Ground

According to Setareh, ESG investing has evolved from a niche strategy into a mainstream necessity. “We are seeing a fundamental shift in how capital is allocated. Investors, especially younger generations and institutional funds, are demanding accountability—not just returns,” she explains.

Several global crises, from climate change to social inequality, have pushed ESG issues into the spotlight. Businesses that fail to address these challenges face increasing risks—regulatory backlash, reputational damage, and declining investor trust. On the other hand, companies that embrace ESG principles are demonstrating long-term resilience and adaptability.

The Strategic Edge of ESG

For Setareh, ESG is not about sacrificing performance for ethics—it’s about integrating both. “A well-structured ESG strategy is a competitive advantage,” she says. “Companies that prioritize sustainability often outperform over time because they are more attuned to stakeholder expectations, regulatory shifts, and long-term value creation.”

She emphasizes that smart investors look beyond quarterly earnings. They examine how a company treats its employees, manages its supply chain, reduces its carbon footprint, and contributes to its community. “These non-financial factors are increasingly linked to financial outcomes,” Setareh notes.

Debunking the Myth: ESG vs. Profitability

One of the biggest misconceptions around ESG investing is the false dichotomy between impact and profit. Setareh addresses this directly: “We need to move past the outdated notion that doing good means doing less well financially. Some of the world’s most successful companies are those that embed ESG at the core of their business models.”

Citing multiple studies and real-world case examples, Setareh illustrates how ESG-focused companies often experience reduced operational risks, improved brand loyalty, and increased access to capital. “In venture capital especially, we’re seeing a surge in climate tech and socially responsible startups. Investors want to be part of solutions, not just returns,” she adds.

How ESG is Shaping Investor Behavior

Investor priorities are shifting dramatically. ESG metrics are now being integrated into investment algorithms, risk models, and performance benchmarks. Setareh points out that asset managers are using AI and big data to evaluate ESG risks and opportunities more accurately than ever before.

“ESG is becoming a standard screen for due diligence,” she says. “When I assess a potential investment, I’m looking at how the founders think about impact—not just in a mission statement, but in how they execute it. It has to be measurable, intentional, and embedded into the company’s DNA.”

Asia’s Role in the ESG Movement

While ESG adoption in Europe and North America has been strong, Setareh is particularly focused on the momentum in Asia. “Southeast Asia is one of the most vulnerable regions to climate risk, but it’s also a hotspot for innovation,” she shares.

She believes this presents a huge opportunity for forward-thinking investors and startups. “We’re seeing incredible innovation coming out of Indonesia, Vietnam, and Singapore in areas like clean energy, ethical fintech, and circular economy solutions.”

Setareh also highlights the importance of culturally relevant ESG frameworks. “ESG in Asia can’t just be a copy-paste of Western models. It must reflect local context, values, and community needs.”

Looking Ahead: ESG as the Baseline

Looking into the future, Setareh sees ESG as a fundamental component of every smart investment strategy. “Eventually, the term ‘ESG investing’ will fade because it will just be called ‘investing.’ It will be assumed that responsible, ethical, and sustainable considerations are part of every decision.”

She also emphasizes the importance of education and mentorship. “As we move into this new era of finance, we need more investors, founders, and policymakers who understand how to build and back businesses that are good for people and the planet,” she says.

Final Thoughts

For Setareh Heshmat, ESG isn’t a marketing angle—it’s a mindset. One that fuses innovation, ethics, and long-term thinking. “Sustainability is smart business,” she concludes. “The future belongs to those who can lead with purpose while delivering performance.”

Through her leadership and vision, Setareh is helping shape a more conscious, resilient, and impactful investment ecosystem—one decision at a time.