About the session
A better tomorrow through sustainable investing: bringing purposeful investment opportunities to the individual investor
Learn from the thought leaders in environmental, social, governance (ESG) investing — Schroders Singapore CEO Susan Soh, Singapore Green Finance Centre Co-Director Dave Fernandez, and Aberdeen Standard Investments Senior Investment Director David Smith — as they cover a wide range of topics about ESG investing.
0:00 Introduction to Endowus ESG offerings
3:37 Introduction by speakers
5:50 Interest rates and higher liquidity in the market
11:40 Defining ESG investing
16:00 How Schroders approaches ESG investing and ESG fund solutions
21:30 How Aberdeen approaches ESG investing and ESG fund solutions
25:40 Singapore Green Finance Centre: mission and vision
34:20 Can you get higher returns from doing good?
40:08 How ESG Investing drives other macro trends
45:50 What individuals and industries can do to improve financial literacy around ESG
50:50 Is gender diversity overrated?
57:50 Poll results: Which aspect of ESG investing resonates most with you?
Excerpts from the webinar:
How do we define ESG investing? (11:40)
David Smith, Aberdeen Standard Investments, Senior Investment Director: There are many interpretations of ESG investing. Broadly speaking, it involves understanding how companies are operated and the impact that they have on the environment, on society, and on the corporate governance funds.
Across industries, it will mean different things for different companies. Some companies may have a greater impact in climate change, in the way they manage the supply chain, and the labour force, or the impact that they have on the local community,
This consequently lead to different measurement of ESG factors across different industries for ESG investing.
When it specifically comes to investing, there are many different terms that have been invented. One way to categorise ESG investing is to think of it as a spectrum of different types of ESG investing.
On the far left of the spectrum is an exclusionary strategy. The negative exclusion approach is when investors wants to express their political, social and ethical beliefs in the way they invest.
On the far right, a more integrative approach is taken, where there isn't a hard constrain. Fund managers would take a holistic approach to understanding investment opportunities and the negative impact that these companies might have. Fund managers also assess how companies manage certain transitions that we are facing around the world.
In the last two to three years, especially after Covid-19, there has been a movement towards looking at the positive impact that companies can bring, instead of looking at it from a negative impact angle.
- An A-Z of climate change terms for investors
- All about sustainable investing — ESG, socially responsible investing, and impact investing
How is Schroders contributing to ESG investment solutions? (16:00)
Susan Soh, Schroders Singapore, CEO: We do it by being responsible guardians of our clients' assets, by considering the different ESG factors that can impact our clients' investments. We also actively manage those risk by engaging the companies that we invest in to influence and direct positive changes. This engagement applies for our equities, credit and private investments. We have a framework that we apply consistently across asset classes.
We also leverage on our voting rights as an active investor, and we actively vote on shareholder resolution. As a company we also have corporate social responsibility strategy, which is developed at the group level around the UN sustainability themes that are important to our stakeholders. They are climate change, which we believe will be a key driver for the economy and the financial markets for many years to come. The other one will be our social priorities. We are a signatory to the UN PRI, and have be rated A1 for six consecutive years. We have also committed to an integrated ESG consideration for all our investments since last year (2020). We have also reached carbon neutrality for all our operations last year.
In terms of social priorities, we are implementing fair workplace practices, which will mean giving equal opportunities to all our employees. We also signed up an investment statement against slavery and human trafficking.
About the Singapore Green Finance Centre (25:40)
Dave Fernandez, Singapore Green Finance Centre, Co-Director: Taking a step back, the Sim Kee Boon Institute for Financial Economics (which launched the Green Finance Centre) essentially tries to take the best ideas out there and make a real solution for society. We made sustainability one of our emerging areas of focus in the Institute.
We were thrilled when the Monetary Authority of Singapore (MAS) announced at the Singapore FinTech Festival (in Q4 2019) its ambition to make Singapore a global leader in green finance. That was extremely exciting to the entire Community. Part of that was to develop a center of excellence centres of excellence in the area of green finance.
Within a few weeks, we were at SMU and in front of MAS, pitching an idea at the end of 2019. We did that together with Imperial College London. We worked all through 2020 on with MAS during Covid-19 and we went out to the Finance industry. We were able to get Schroders, Fullerton, and and seven banks as the nine founding partners to donate and to support this new initiative.
The idea of the Singapore Green Finance Centre is to achieve the ambition of putting Singapore as a leader in this global conversation by bringing the ecosystem together
We bring the university rigour and dispassionate view both from Imperial College who's already gotten a head start for the past four years. My partner Charlie Donovan heads up a centre that's been around for four-plus years at Imperial focused on climate finance. So we'll leverage on their expertise.
We'd like to be leaning our actions towards the private sector and follow the money. We hope that academia also plays an important role. But in order for this urgent problem to really have capital redeployed in a way that can make a meaningful difference. It needs to be led by the private sector. We decided not to let the academics to find what research to use because that'll take a long time.
We want to have shorter impactful research that will help the industry or add things like standards and measurements. There also have dialogues with our founding partners to build a talent pipeline. There is not a lot of expertise in the industry, we have to upgrade upskill the folks who are already in the financial sector.
Is gender diversity overrated? How do we measure impact? (50:50)
Susan Soh, Schroders Singapore, CEO: With diversity, you get more innovative ideas and more brainstorming — that's very useful in an organisation. We make sure that in any discussion groups we have, they're diverse not just in terms of gender but also the different (business) functions; that's the way to see a more holistic picture. Diversity is not just about women, but also having a good representation of brain power that can come together and develop ideas.
Dave Fernandez, Singapore Green Finance Centre, Co-Director: I think that whatever you're trying to accomplish, there must be a way that everyone agrees on to measure whether or not you're moving toward your stated goal. When I first joined the Sim Kee Boon Institute, we didn't have any women on the advisory board, but that has since changed — that's quantifiable progress. (It has to be an intentional effort.) At the minimum, there needs to be awareness, and there should be a way to count or measure these things.
In the ESG space, if I take the sceptical academic's view, the industry has certainly pushed ahead with many ways of scoring. But there are also myriads of contradictions in the way that these ratings are put together, and that's why you get different outputs for the same companies, sometimes pointing in opposite directions. We as the academic community have done our job of being sceptical about it, and now what we'd like to do at the centre is to move that discussion forward. In particular, there's a feeling that contributions and voices from Asia have largely been absent so far in the conversation of what ought to be measured and considered as these ESG aggregates and benchmarks are put together. There needs to be an agreed upon way to measure ESG impact. We can't just keep waving our hands and say, "I'm doing good, right?".
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