Cover Photo: Fahrul Azmi / Unsplash

At a closed-door virtual event co-organised by Tatler Singapore and Generation T Asia in partnership with HSBC, three speakers discussed why being more ESG focused in business is not just good for people and the planet, but also for profits

The world is becoming more plugged into ESG (environmental, social and governance) development, thanks to growing public awareness around issues such as climate change and employee well-being. More companies are thinking of ways to make their practices more sustainable, while individual consumers are gradually turning their attention to green investments.

The path to achieving these goals, however, isn’t always clear for everyone. How can companies and investors bring their sustainability ambitions to fruition? Three experts discussed this question and more at a virtual panel session on October 26, co-organised by Tatler Singapore and Generation T in partnership with HSBC. As a global bank, HSBC recognises the need for economic development to be sustainable and it contributes to this in several ways. This includes providing US$100 billion of sustainable financing and investment by the year 2025, and reducing its exposure in high-carbon sectors. 

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The online session featured three speakers including James Cheo, chief investment officer of Southeast Asia, Private Banking and Wealth Management at HSBC; Jessica Cheam, founder and managing director of Eco-Business; and Tan Szue Hann, chairman of sustainability at the Singapore Institute of Architects. The conversation was also moderated by Karishma Tulsidas, editor-in-chief of Tatler Singapore.

Here are some highlights from the discussion.

The positive impact of ESG on business

Years of fossil fuel disinformation have made many of us believe that cleaning up our act is costly, more costly than the status quo perhaps—but the data is saying otherwise. 

“Companies who are ESG leaders tend to outperform the general index by at least one to two percent,” shared Cheo. He also added that due to better management practices, such companies are able to ride through major crises more smoothly and report stronger profits. “They tend to have higher profitability—around 18 percent more—than the companies at the bottom 10 percent of the ESG scoreboard.”

No jobs on a dead planet

For Tan, more attention needs to be given to ESG. “It is [necessary] to preserve our livelihoods on the planet, because [there are] no jobs on a dead planet,” he said. “It needs to be hyped because this would draw more attention to it and in turn, more investments. At the same time, it needs to come with an asterisk; it has to be measured using equitable terms [that are relevant] to each community, because we don’t all go by the same yardstick.”

Greater demand for sustainable investments

Providing insights on how the current economic situation is impacting the appetite for green investments, Cheo shared: “We are going to be stuck in this lower interest rate environment for longer due to slowing growth. This sets the stage for green investments to prosper, because in a low to zero interest rate environment, any alternative investment with a higher yield will thrive.” 

He also highlighted that as the world becomes more digital, we will see more innovations addressing sustainability, making it a long-term trend. “Sustainability will no longer be a good to have, but a must-have.”

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What to know before going into sustainable investing

For investors who are looking to widen their portfolio with more sustainable investments, Cheam provided three tips: “Before you start, do your research. There’s a lot of greenwashing going on, so it’s absolutely important to do your homework and be armed with the [necessary] knowledge before you decide where you want to invest. Next, be clear about your investment focus. Think about where you can make the greatest impact. Finally, be clear about how you want to measure the impact of your investment. Is it a tonne of carbon saved per dollar invested, health and education access, financial inclusion or something else?”

The cost of inaction

For businesses and investors who continue to deny sustainability, becoming obsolete is a risk. “There’s a cost to inaction,” said Cheam. “There’s this concept called stranded assets—are you investing in infrastructure or an asset that will be stranded in the future and therefore, you’ll lose all of your investment value? Are you becoming irrelevant because you haven’t kept up with the times?” 

For companies and investors alike, the goal is to be part of the solution, not the problem. “If you’re looking at your own operations and supply chain, but you haven’t thought about the cost of your emissions to your business, then when you face a very competitive global landscape, you stand to lose,” said Cheam. “There’s the risks and the opportunities, so we have to be holistic in the way we look at this whole issue.”

This panel discussion was organised in partnership with HSBC.

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