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Janet Shum, Asia Pacific Sustainable Investing Specialist at Citi Private Bank, highlights fast-growing areas in sustainability that investors should know

When it comes to priorities for 2022, recovering from the pandemic is critical. But it is at least as important to step up our collective efforts to combat the twin crises of climate change and biodiversity loss, on top of other global risks.

“The world today is on track for at least 2.4 degrees Celsius of warming above pre-industrial levels, which exceeds 1.5 degrees, the threshold to avoid irrevocable consequences of climate change such as intense and frequent extreme weather events and rising sea levels,” says Janet Shum, Sustainable Investing Specialist for APAC at Citi Private Bank. “We have also witnessed major loss of global wildlife population and rainforests that provide us with diverse natural, social, and economic benefits. The evidence is irrefutable.” 

“Environmental impacts worsen and are further exacerbated by growing inequality and unsustainable economic development,” adds Shum. “The urgency to deliver sustainable and inclusive economic growth is a key driver for innovation and transformation; it creates immense business and investment opportunities that can do well while doing good.”

Below Shum highlights the latest innovative sustainable developments, from decarbonisation to nature positivity to social inclusion, and how they are creating opportunities for investors.  

See also: Women of Worth: A Series Celebrating and Supporting Financial Empowerment 

What developments do you expect as the green momentum continues to accelerate?

Greening the world is not a passing trend but an unstoppable one, given its momentum and importance to the future of humanity.

In 2021, we saw further pledges at the UN Climate Change Conference (COP26) to strive for net-zero carbon emissions, the phase down of coal, halting and reversing deforestation as well as methane emission reduction. In 2022, we expect to see new opportunities emerge as the world translates these pledges into actions.

See also: Young Women Lead Climate Change Activism, But Who Sets the Policies?

Technological advancement and economies of scale will continue to drive clean energy supply and lower its cost. The International Energy Agency estimates clean energy investment to reach over US$100 trillion by 2050. We foresee that electric carmakers, charging station companies, battery makers, infrastructure suppliers and installers, and smart appliance makers will continue benefiting from the net-zero target initiatives.

A whole range of innovations and disruptions has emerged to address other carbon-intensive sectors including cement, agriculture, and food production. Hydrogen technologies, carbon capture utilisation and storage, climate-smart farming, alternative and cultured proteins, and novel cements are some of the examples that are advancing fast.

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With biodiversity and climate change inextricably linked, what opportunities are there related to the protection of biodiversity?

In addition to achieving net zero for carbon, with the realisation that biodiversity loss is too costly to ignore, there is an increasing push to be nature positive. This means taking an approach that can increase protection, restoration, and sustainable management of ecosystems such as forests, grasslands, freshwater, and marine.

According to the World Economic Forum, nature-positive solutions can create US$10 trillion in business opportunities and 395 million new jobs by 2030. These opportunities span the three socio-economic systems: food, land, and ocean use; infrastructure and built environment; and extractives and energy. Areas to watch include circular and resource efficient businesses (eg, following the 3Rs model of reduce, reuse and/or recycle); product and regenerative agriculture (eg, using advanced precision technologies); and planet compatible consumption (eg, eco-fashion, sustainable fishing and alternative proteins).

Most businesses have a two-way relationship with nature. Forward-looking companies that assess their dependencies and impact on nature and adapt accordingly will become more resilient. For example, long-term viability of food producers depends on pollution prevention and supply chain continuity with access to land, clean water, and natural resources.

Moreover, international initiatives such as The Finance for Biodiversity Pledge and nature-related risk management and disclosure framework, such as The Task Force for Nature-related Disclosures, together with the advancement in smart digital technology, will enhance transparency and data resources that lead to an increase in investments related to biodiversity.

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What about opportunities in social investments?

Equity is crucial for sustaining economic growth, maintaining social harmony, and fighting against environmental crises. It has taken on new urgency as we see certain groups hit harder than others by the pandemic and climate change. 

Greening the world requires multi-dimensional change with social and economic considerations. Applying a multi-dimensional approach can help to facilitate a just transition and create a ripple effect. For example, applying a gender lens in climate investments can reduce the disproportionate risks women face in climate-induced disasters, increase the number of green economy jobs for women, and enhance female empowerment.

With the growing significance of interconnected themes, we will see the private sector play a bigger role in enhancing social and financial inclusion across many areas including education, affordable healthcare and housing, food, microfinance, and access to the digital world.

Consider that the pandemic has already accelerated digital transformation for many businesses and essential services. Companies that prioritise sustainability management while embracing new technology to facilitate this transformation are winners to look out for, as they can achieve benefits such as better employee health and wellbeing, workforce productivity, customer attraction and retention, and business continuity.

This is the third and final Ask the Expert instalment on sustainable investing. Missed the previous instalments? Read up on how to start building a sustainable investment portfolio and how to evaluate sustainable investments and avoid greenwashing.

This Front & Female article is created in partnership with Citi Private Bank for our Women of Worth series celebrating and supporting independent women to pursue their worth. Join the Front & Female community by subscribing to our newsletter and following #frontandfemale

About Citi Private Bank: 

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