Your browser does not support JavaScript! Pls enable JavaScript and try again.
SI Forum

Sustainable Investing

Sustainable Investing Forum 2022

Sustainable investing continues to extend its reach into the mainstream. The geopolitics of today that has caused food and energy scarcity has also quickened the pace of change towards finding longer-term solutions, and brought on a slew of investment opportunities. Asia is well positioned to lead the transition towards sustainable development and contribute to the global sustainability agenda.

These were among the hot-button topics discussed at the Citi Global Wealth Sustainable Investing Forum in August 2022, which was attended virtually by our clients and prospects in Asia.

There were three separate – but interlinked – panels with speakers including Citi subject matter experts and professionals, global industry leaders and investors discussing the importance of sustainable investing, greening our world and the sustainable transition in Asia.

“Not only do sustainability challenges pose risks which have material financial impact but also present opportunities for investors to invest in innovations driving environmental and social progress across the globe,” said Angel Ng, Head of Asia, Citi Global Wealth.

Institutional investors like GIC, one of the world’s largest sovereign wealth funds, is committed to integrating sustainability in their investment process and operations with the view that it is an investment issue.

“Companies with strong sustainability practices will offer prospects of better risk-adjusted returns over time. This relationship will continue to strengthen as markets price in the externalities.” said Ms. Liew Tzu Mi, Chief Investment Officer for Fixed Income and Chair of the Sustainability Committee at GIC.

Greening the world is an unstoppable trend and presents investment opportunities from renewable energy and electric vehicles to agriculture.

“There's a long period of significant investment needed in redundant energy supplies, clean energy, if we're going to reduce fossil fuel output in carbon emissions. We have simultaneously been reminded how geopolitical risk can limit this vital resource of energy. I would consider it again as a good long term investment component.” said Steven Wieting, Citi Global Wealth’s Chief Investment Strategist and Chief Economist.

Apart from companies along the energy transition value chain, investors can watch out for companies that focus on food security such as agricultural yield optimization, precision agricultural technology, crop protection and seed company suppliers.

“Decarbonization is at the point of no turning back. That's being pushed by policies and pulled by demand for investors and we're finding lots of investment opportunities.” said Wendy Agnew, Senior Portfolio Manager, Citi Investment Management.

The availability and quality of ESG data is critical for sustainable investing. Linda-Eling Lee, Global Head of ESG and Climate Research, MSCI advised investors that “Increasingly ESG data is available to help investors navigate the system confusion with names and labels and is focusing on what they prioritize as their sustainability objective.” There is no one size fits all solution.

The last panel discussion shifted to Asia, the center of many sustainability challenges and the manufacturing heart of the global economy.

“The APAC region is home to five of the ten largest carbon 50 countries in the world, accounting for over 45% of global emissions…..A lot of the global leaders in developing and producing green technologies are actually right here. If Asia doesn’t get the transition right, the world isn’t going to.” said Emily Woodland, Managing Director and APAC Head of Sustainable Investing at Blackrock. She added that Asia was crucial to the global transition journey.

Although the adoption of sustainable investing in APAC is lower than the global average, it is growing faster than other regions.

Population growth, urbanization and the pandemic have led to an increase in plastic waste. When asked about why plastic waste should be seen as an investment opportunity, Regula Schegg, Circulate Capital Managing Director in Asia explained tackling plastic waste brings both environmental impact and economic value. ‘95% of our plastic packaging is used once and then it's thrown away. However, there's tremendous opportunity to capture the value of plastic because the recycling industry is out there. There is more demand of recycled material than there is supply.’ said Ms Schegg.

Ms. Schegg added in the last three years High Net Worth Individuals (HNWIs), family offices and funds have all taken an interest or have considered investments in renewables and recycling. That in itself represents a mindset shift and the belief that investors can do well while doing good.

Our speakers emphasized throughout the forum that investors do not need to compromise financial returns to make sustainable investments. As IFC’s Regional Industry Director for Manufacturing, Agribusiness and Services, Rana Karadsheh-Hadad said: “Sustainable investments are actually not just sustainable for the environment…but it's sustainable for your balance sheet.”

Ignoring sustainability is a portfolio risk. The sustainable investing landscape continues to evolve and expand. There are now a variety of sustainable investment solutions across investment approaches, asset classes and themes to help investors pursue simultaneous societal change and competitive financial returns.