Since its inception in 2019, over 1,000 companies have signed up for the Business Ambition for 1.5C Campaign. The Science Based Targets Initiative (SBTi) is a global organization that encourages companies to set climate action targets aligned with the latest climate science, aiming to reduce greenhouse gas emissions in line with the Paris Agreement.
971 corporates were analyzed in a recent study by the SBTi. This study aims to assess companies’ progress in setting and implementing science-based climate targets aligned with the Paris Agreement.
Although the UK, US, France, Sweden, and Germany demonstrated strong participation, the report emphasized a critical challenge: 239 companies had their net-zero commitments revoked due to non-compliance.
Source: Business Ambition 1.5°C Final Report (SBTi)
The SBTi mandates that companies and financial institutions set science-based targets within 24 months of their pledge. Those who fail to meet this requirement are listed as “Commitment Removed” on the SBTi Dashboard, following a policy change in January 2023. Well-known brands such as Diageo, Microsoft, Unilever, Marks & Spencer, and Procter & Gamble have seen their commitments delisted from the SBTi dashboard.
Scope 3: The Biggest Obstacle
The most significant obstacle cited by companies involves managing value-chain emissions.
According to the SBTi, “About half of the survey respondents identified the complexity of Scope 3 emissions as a major hurdle in setting net-zero targets.” SBTi also observed that “Only a small number of companies are prepared to set ambitious, long-term decarbonization targets for their value chain,” noting that for some, the uncertainties are too great.
Recently, the US Securities and Exchange Commission decided to exclude Scope 3 emissions from its new climate disclosure regulations following corporate concerns about the challenges and costs of acquiring precise data.
Barriers face by companies in setting net-zero targets
The Industry Response
Walmart has reduced over 1 gigaton of emissions since 2017 and is now analyzing its Scope 3 emissions to refine its strategy in line with the Greenhouse Gas Protocol. Walmart continues to hold its status with the SBTi while working toward its net-zero targets.
Despite SBTi removing its net-zero commitment, Microsoft continues to pursue its 2020 environmental goals and maintains a near-term, SBTi-validated target.
Procter & Gamble (P&G) is actively collaborating with SBTi, having validated its near-term Scope 1, 2, and 3 emissions reduction targets, and remains dedicated to transparent, science-based climate action.
Unilever’s initial net-zero target was found incompatible with SBTi’s methodology, leading to a revised plan that aims for a 42% reduction in Scope 3 emissions. The company anticipates SBTi approval soon and is committed to achieving its net-zero ambitions by 2039 through emissions reductions and carbon removals.
Next Steps
The SBTi recognizes the challenges identified in this study, especially the difficulty of managing Scope 3 emissions. To address these, the SBTi will expand its sector-specific standards and implement regional differentiation to engage more participants from the global south.
Furthermore, a comprehensive review of the SBTi corporate net-zero standard will be conducted next year, with insights gained guiding future improvements and helping companies better align their climate targets with the 1.5°C pathway. These steps will support businesses in setting clear, ambitious, and compliant targets that can enhance the industry’s ability to meet global climate goals.
https://aquila.is/wp-content/uploads/2024/05/2023-05-social-posts-Over-239-Companies-are-Projected-to-Miss-Net-Zero-Targets.png6271200Annie Huonghttp://aquila.is/wp-content/uploads/2024/05/aquila-logo320x132.pngAnnie Huong2024-05-08 14:07:272024-05-10 14:38:52Over 239 Companies are Projected to Miss Net Zero Targets, Reports GreenBiz
“At Goldman Sachs, sustainable finance is a core competency – a better way of serving our clients, driving innovation, and advancing sustainable economic growth.” KYUNG-AH PARK (Head of Environmental Markets & Innovation, Sustainable Finance Group, Goldman Sachs)
Sustainable Finance Definition
Sustainable finance encompasses the integration of environmental, social, and governance (ESG) considerations into financial services and investment decisions. This practice not only aims to promote long-term environmental stewardship and social equity but also seeks to offer substantial economic growth through investments in sustainable economic activities and projects. As of 2020, global ESG assets are on track to exceed $53 trillion by 2025, representing more than a third of the $140.5 trillion in projected total global assets under management.
Historical Background
Evolution of Sustainable Finance
Early Beginnings in the 1960s: This era marked the initiation of the modern environmental movement, with events like Earth Day and the publication of Rachel Carson’s “Silent Spring” highlighting the impacts of pollution and the indiscriminate use of pesticides.
Incorporation of ESG Factors: By the late 1990s and early 2000s, ESG factors were increasingly integrated into mainstream financial analysis, reflecting a shift towards recognizing the financial materiality of non-financial factors.
Influence of Public Awareness and Regulatory Pressure: Public demand and tighter regulations have driven the growth of sustainable finance, as environmental disasters and climate change push for more corporate responsibility and transparency.
Moreover, in 1992, the Earth Summit in Rio de Janeiro established the United Nations Environment Programme Finance Initiative (UNEP FI), recognizing the crucial role of private finance in sustainable development. Thirty years later, UNEP FI’s members are pioneers in the finance world, driving transformations toward a system that supports sustainable development.
Key milestones
The Equator Principles (2003): These principles have been adopted by over 90 financial institutions worldwide, influencing over $700 billion in loans and offering a systemic approach to environmental and social risk management.
The Paris Agreement (2015): It has catalyzed financial innovations such as climate risk insurance and climate-aligned bonds, pushing financial institutions to align their portfolios with low-emission, climate-resilient pathways.
Development of Green Bonds (first issued in 2007): Green bonds have grown exponentially in popularity, with issuance reaching $257.7 billion in 2019 alone, underlining their role in mobilizing capital for sustainable development projects.
Sustainable Finance Surge
On Vietnamese Grounds
For Vietnam, the progress includes the State Bank of Vietnam’s approval of a program on green bank development and an action plan aligned with the nation’s sustainable development goals for 2030. By 2025, Vietnam aims to have an environmental and social (E&S) management system in all financial institutions and integrate E&S risk assessments into their credit risk assessments. This commitment is demonstrated by a 2019 survey revealing that 76% of banks had a sustainable finance strategy in place, with several banks already implementing E&S systems to meet regulatory requirements.
Southeast Asia Framework
In the broader context of Southeast Asia, efforts to shift towards sustainable financial systems are being supported by initiatives such as the ASEAN-5 economies’ transition to low-carbon and climate-resilient economies. This includes a significant push towards climate change mitigation and adaptation, emphasizing the critical role of the financial sector in supporting these goals.
In an era where global trade acts as the backbone of economies, accounting for approximately 25% of the global GDP, its environmental impact is undeniable. With international trade being responsible for 20% to 30% of global greenhouse gas (GHG) emissions and 80% to 90% of these activities reliant on trade finance, the role of sustainable trade finance becomes pivotal. This concept bridges the gap between economic growth and environmental stewardship, offering a promising avenue for financial institutions (FIs) to drive positive change.
Transforming Foundations: Sustainable Trade Finance in Action
Global Standards and Initiatives
The path to integrating sustainability into trade finance is paved with global standards and collaborative initiatives. The United Nations Environment Programme (UNEP) Finance Initiative and the International Chamber of Commerce (ICC) have been instrumental in this regard. UNEP focuses on the harmonization of global standards and benchmarks, while the ICC has set forth principles and guidelines to evaluate sustainable trade finance practices. These efforts underline the growing consensus on the necessity of sustainable practices in the financial sector.
A Global Perspective
The ICC’s Global Survey 2020 reveals a significant shift towards sustainability, with 76% of banks incorporating environmental, social, and governance (ESG) considerations into their risk management frameworks. This not only marks a paradigm shift in operational ethos but also highlights the sector’s commitment to a sustainable future.
Spotlight on Singapore
Singapore stands out as a beacon of sustainable trade finance, exemplified by its Green & Sustainable Trade Finance and Working Capital (GTF) Framework. Launched in 2021, the framework has guided banks and non-bank financial institutions in evaluating green trade finance transactions. The successful execution of four pilot projects under this framework, alongside the SG TradeX’s data exchange platform for green transactions, showcases Singapore’s leadership in fostering sustainable trade finance.
The Vietnamese Context: Challenges and Opportunities
Vietnam’s trade finance landscape presents a mix of challenges and opportunities for sustainability. With a $150 billion bank-intermediated trade finance market, the dominance of the top banks in this sector is clear. However, a focus on emission-intensive industries highlights the urgent need for a sustainable shift. The WTO’s 2023 report points to a significant data gap, with only 29% of banks financing climate-related activities. This gap underscores the potential for growth in Vietnam’s sustainable trade finance, demonstrated by recent agreements like Standard Chartered & BIDV’s $100m framework and HSBC & DOHACO’s green finance initiative.
Looking Ahead: The Future of Sustainable Trade Finance
The road to fully integrating sustainability into trade finance is lined with opportunities for innovation and collaboration. Key areas for development include:
– Digitalization: Leveraging technology to fill data gaps, enhance transparency, and streamline processes.
– Standardization: Establishing clear criteria for assessing the sustainability of trade transactions.
– ESG Integration: Embedding ESG considerations into trade financing decisions to foster a uniform approach.
– Capacity Building: Enhancing knowledge and skills through workshops, training, and industry dialogues.
– Policy Advocacy: Creating conducive policies for sustainable trade practices through active dialogue and advocacy.
– Partnerships: Fostering collaborations among financial institutions to amplify the impact of sustainable practices.
Conclusion
As we stand at the crossroads of economic growth and environmental conservation, sustainable trade finance offers a path forward that reconciles both. By embracing digital innovation, standardization, and collaborative efforts, the finance industry can lead the charge towards a more sustainable and equitable global trade ecosystem. The journey is complex and filled with challenges, but the potential rewards for our planet and future generations are immeasurable.
Vietnam’s strategic shift towards green growth and sustainable economic development is underscored by a series of governmental guidelines, policies, and development programs aimed at fostering economic prosperity, environmental sustainability, and social justice. The cornerstone of this initiative is the national strategy on green growth, which has seen several iterations, with the most recent being Decision No. 1658/QD-TTg, issued by the Prime Minister on 1 October 2021. This strategy outlines Vietnam’s vision for 2021-2030, extending to 2050, emphasizing the transition to a green, carbon-neutral economy to contribute to global efforts in limiting temperature rise.
Key goals set forth by this strategy include reducing greenhouse gas emissions relative to GDP, promoting sustainable practices across economic sectors and lifestyles, and ensuring an equitable and resilient transformation process. The State Bank of Vietnam (SBV) plays a pivotal role, tasked with aligning banking and credit institutions with these green growth targets, developing green banking models, and implementing credit policies to support green investments.
Enhancing Legal Frameworks for Green Finance
Furthering these efforts, Decision No. 882/QD-TTg, promulgated on 22 July 2022, focuses on enhancing the legal framework for green credit and banking. It seeks to address environmental and social risks, alongside climate and natural disaster risks, in credit activities. Policy documents issued since 2020 have progressively incorporated Environmental, Social, and Governance (ESG) criteria into legal regulations, highlighting a clear direction towards financing for sustainable development and ESG integration within the financial and banking sectors.
2022 marked a significant year for environmental focus in Vietnam’s financial and banking sectors, with the issuance of Circular No. 17/2022/TT-NHNN by the SBV. This circular guides environmental risk management in credit extension activities, complementing initial regulations on green credit and green bonds embedded in the Law on Environmental Protection 2020 and its subsequent decree, Decree No. 80/2022/ND-CP. These efforts are further supported by the Ministry of Natural Resources and Environment, responsible for formulating environmental criteria and certifications for green projects.
Advancing Sustainable Finance Regionally
At an international level, the Development Strategy of the Vietnam Banking Sector to 2025, with a vision to 2030, aims for alignment with ASEAN and global standards, despite Vietnam not issuing green, social, or sustainability bonds as per ASEAN standards as of early 2023. The Sustainable Banking and Financial Network (SBFN), established in 2012, underscores Vietnam’s commitment to sustainable finance, with SBV and the Ministry of Natural Resources and Environment representing the country in this global network.
The ASEAN Capital Market Forum (ACMF), the Ministry of Finance, and the State Securities Commission of Vietnam are identified as key players in advancing sustainable finance within the region. Noteworthy partnerships in 2021, such as HDBank’s agreements with international and development finance institutions, and BIDV’s Green Credit Agreement with the French Development Agency (AFD), highlight the growing emphasis on sustainability standards and climate change mitigation in Vietnam’s banking sector. In 2022, VPBank’s syndicated loan agreement with multiple international banks and agencies further illustrates the mobilization of capital towards supporting Vietnamese SMEs and women-owned businesses in alignment with sustainable development goals.
This multifaceted approach to green growth and sustainable economic development showcases Vietnam’s commitment to environmental sustainability, social equity, and economic prosperity, positioning the country as a proactive participant in the global transition towards a greener future.
https://aquila.is/wp-content/uploads/2024/03/pasted-image-0.png10241024Annie Huonghttp://aquila.is/wp-content/uploads/2024/05/aquila-logo320x132.pngAnnie Huong2024-03-11 16:40:182024-03-11 16:40:18Vietnam’s Green Transition: Shaping a Sustainable Future through Policy, Finance, and International Collaboration
According to ClientEarth, greenwashing is a deceptive practice where companies present themselves as environmentally friendly and sustainable, despite their operations causing significant environmental harm.
Why do companies greenwash?
Companies engage in greenwashing for various reasons, including:
1. Pressure to act sustainably: The urgent call for climate action and increasing awareness among consumers push companies to adopt green initiatives, sometimes before they are ready to invest sufficiently in meeting their environmental goals.
2. Lack of information: Insufficient data makes it challenging to assess the full environmental impact of a company’s operations, allowing room for misinterpretation and misleading statements.
3. Lack of transparency: Many instances of greenwashing arise from a deliberate choice to omit relevant information or present selective data, giving a skewed view of a company’s environmental performance.
4. Lack of ambition: Some organizations struggle to grasp the magnitude of the challenges ahead and fail to develop realistic plans to meet their sustainability objectives.
5. Lack of accountability: Weak governance structures within companies contribute to a culture where greenwashing goes undetected and unrestricted.
6. Lack of incentives: The absence of strict consequences for greenwashing encourages companies to continue the practice, especially since sustainable investing is gaining popularity.
7. Lack of standards: Conflicting and inconsistent guidelines for measuring and reporting sustainability allow companies to exploit gaps in the system.
It boils down to a mix of external pressure and internal shortcomings. On one hand, there’s a genuine push from consumers and regulators for businesses to be more sustainable. On the other hand, companies struggle with insufficient data, unclear regulations, and the lack of a strong sustainability strategy, leading them to opt for the appearance of green rather than the reality of it.
“We have forgotten how to be good guests, how to walk lightly on the earth as its other creatures do.”
Barbara Ward
6 types of greenwashing
In a groundbreaking effort to shed light on this issue, Planet Tracker has identified 6 types of greenwashing, offering us a lens through which we can better understand and combat these misleading practices.
Greencrowding
Greencrowding is the practice of hiding in numbers to obscure individual environmental accountability. This approach dilutes individual responsibility, allowing companies to benefit from a collective facade of sustainability without significant individual contribution. A striking example is the Alliance to End Plastic Waste (AEPW), closely linked to the American Chemistry Council, which opposed the Global Plastic Pollution Treaty. Despite bold claims of tackling plastic waste, the AEPW recycled a negligible amount of plastic, less than 0.0004% of global production, revealing a vast gap between promise and action. The alliance’s failure to provide transparent, measurable progress further underscores the deceptive nature of greencrowding, highlighting the need for diligent scrutiny of such collective environmental initiatives.
Greenlighting
Greenlighting occurs when companies highlight minor green initiatives to distract from larger, damaging activities. This selective showcasing misleads the public about the company’s overall environmental impact, creating an illusion of sustainability. TotalEnergies exemplifies this by promoting its rebranding and minor green initiatives on social media, despite planning to increase oil and gas production, which contradicts its purported commitment to reducing emissions. This discrepancy led to legal actions accusing TotalEnergies of misleading practices, as these greenlighting efforts obscure the reality of their environmental footprint, demonstrating the manipulative potential of selective corporate messaging.
Greenshifting
Greenshifting is a tactic where companies shift environmental responsibility onto consumers, deflecting from their own impact. By implicating consumers, corporations sidestep accountability for their significant roles in pollution and environmental degradation. Shell’s inquiry to the public about reducing emissions, despite its own substantial contributions to climate change, is a prime example. Harvard researchers further highlighted ExxonMobil’s strategic communications focusing on consumer behavior over corporate accountability. Such greenshifting not only misleads public perception but also unjustly reallocates the burden of environmental action, illustrating the strategic avoidance of corporate responsibility.
Greenlabelling
Greenlabelling involves misleading claims about a product’s environmental friendliness. It exploits consumers’ desire for sustainable options, often without providing the full context or verifiable information. SC Johnson’s Windex Vinegar Ocean Plastic bottle, marketed as made from 100% ocean plastic, later clarified to include “ocean-bound” plastic, which significantly broadens the claim’s scope. Similarly, KLM faced a lawsuit over its CO2ZERO program for misleading claims about offsetting the environmental impact of flying. These cases reveal the complexity of greenlabelling, where nuanced or partially true claims mislead consumers and obfuscate the products’ real environmental impacts.
Greenrinsing
Greenrinsing describes the practice of frequently changing environmental targets without genuine progress. It’s a strategy to appear ambitious in sustainability goals while failing to meet them, leading to skepticism about corporate environmental claims. Coca-Cola and PepsiCo have notably adjusted their recycling targets multiple times without significant achievement, exemplifying greenrinsing. This tactic, reflecting a broader trend of unmet and constantly shifting environmental goals, undermines trust in corporate sustainability efforts and highlights the need for more stringent and transparent accountability measures.
Greenhushing
Greenhushing is when companies under-report or hide their sustainability achievements to evade scrutiny or inflate their perceived progress. It’s a subtle form of greenwashing that misleads investors and the public about a company’s environmental efforts. The downgrading of funds by major asset management firms, purportedly in response to strict regulation, may also serve to obscure the true extent of their environmental engagement. This strategy, while less overt, contributes to the misinformation surrounding corporate sustainability performance, emphasizing the complexity of greenwashing tactics and the importance of rigorous, independent verification of corporate environmental claims.
What’s next: best practices for investment managers
Members of the European Parliament (MEPs) have adopted a new law aimed at combating greenwashing and improving consumer information on product durability. Parliament’s rapporteur Biljana Borzan (S&D, HR) said: “This law will change the everyday lives of all Europeans! We will step away from throwaway culture, make marketing more transparent and fight premature obsolescence of goods. People will be able to choose products that are more durable, repairable and sustainable thanks to reliable labels and advertisements. Most importantly, companies can no longer trick people by saying that plastic bottles are good because the company planted trees somewhere – or say that something is sustainable without explaining how. This is a big win for all of us!”
As the financial industry moves towards a more sustainable future, investment managers are at the forefront of adopting practices that ensure transparency, accountability, and genuine impact. The evolution of sustainable finance necessitates tools that offer precise and verifiable data to guide investment decisions. In this landscape, the integration of Internet of Things (IoT) technology into sustainability assessments presents a promising direction.
Aquila is pioneering the use of IoT-driven data to revolutionize sustainable finance. Providing investment managers with granular, real-time environmental data, we enable a deeper understanding of the actual impact of their investments, moving beyond self-reported data that can be susceptible to greenwashing.
Singapore, December 6, 2023 – The Monetary Authority of Singapore (MAS) has taken a significant step towards enhancing transparency in the Environmental, Social, and Governance (ESG) space by publishing its finalized Code of Conduct for ESG Rating and Data Product Providers. Following a successful public consultation from June to August 2023, this groundbreaking initiative aims to establish industry-wide standards for transparency, governance, and conflict management.
1. Setting the Stage for Industry Standards
MAS’s Code of Conduct (CoC) serves as a pioneering framework, setting baseline standards aligned with the International Organisation of Securities Commissions’ (IOSCO) recommendations. The CoC focuses on ensuring transparency in methodologies and data sources, effective governance, and managing conflicts of interest that could compromise the reliability of ESG products.
2. Strong Industry and User Support
The response from industry participants and users during the public consultation has been overwhelmingly positive, with strong support expressed for the CoC. Acknowledging the need for third-party assurance or audit of providers’ self-attestations on the accompanying Checklist, the CoC aims to instill confidence in users regarding the integrity of ESG data and ratings.
3. Encouraging Adoption and Disclosure
MAS encourages ESG rating and data product providers to publicly disclose their adoption of the CoC and share their completed Checklist within 12 months from the publication of the CoC. To facilitate easy identification of compliant providers, MAS has collaborated with the International Capital Market Association (ICMA) to host a list of such providers on ICMA’s website.
4. A Catalyst for Market Confidence
Mr. Lim Tuang Lee, Assistant Managing Director (Capital Markets) at MAS, emphasized that the CoC will play a pivotal role in boosting market confidence in the use of ESG rating and data products. The baseline transparency standards are expected to enhance the comparability of ratings and data products, empowering investors to make more informed decisions in the ever-evolving landscape of ESG investing.
5. Future Regulatory Considerations
MAS remains committed to monitoring industry developments and global regulatory landscapes, with an openness to further enhancing the regulatory regime for ESG rating and data product providers based on evolving needs and best practices.
6. Embracing a Sustainable Future
The Code of Conduct aligns with global efforts towards sustainable finance, encouraging ESG product providers to consider forward-looking elements in their offerings. This, in turn, enhances investors’ ability to assess how investee entities respond to transition risks and opportunities, further supporting informed decision-making in funding the climate transition.
Check out our Knowledge Hub for more Sustainable Finance content
https://aquila.is/wp-content/uploads/2024/01/pexels-wojtek-paczes-19443296-scaled.jpg15262560Annie Huonghttp://aquila.is/wp-content/uploads/2024/05/aquila-logo320x132.pngAnnie Huong2024-01-08 18:38:352024-01-08 18:41:54MAS Sets the Standard: ESG Rating Providers Embrace Transparency with New Code of Conduct
Southeast Asia’s evolving landscape melds environmental, social, and governance (ESG) factors with financial dynamics. The region’s vulnerability to natural disasters propels a surge in sustainable finance initiatives.
ESG Progress in Southeast Asia
While prioritizing rapid economic growth, Southeast Asia grapples with carbon-intensive activities that exacerbate climate change. Initial ESG strides in the region emphasize environmental concerns in policies and regulations. Over the past five years, Asia-Pacific has witnessed a doubling in ESG policies, aligning corporate disclosure with or even surpassing US standards, as reported by Goldman Sachs.
Transitioning towards ESG Principles
Learning from European advancements, Southeast Asia now pivots towards ESG disclosure, climate risk mitigation, and decarbonization. Despite varying institutional maturity, ASEAN’s unified sustainable finance taxonomy and specific country frameworks in Malaysia and Indonesia signal a collective approach.
The Rise of Sustainable Finance
Forecasts predict a surge in sustainability-related policy developments. In 2023, there was a 40% increase in green finance development compared to 2022. Governments lead the charge, with corporations and small to medium-sized enterprises anticipated to follow suit, thus shaping a financial landscape increasingly influenced by ESG imperatives in Southeast Asia.
Looking Ahead to 2024
The forecast for green finance in 2024 remains promising, showcasing a global commitment to sustainable investments. Projections indicate a significant uptick of over 20% in green finance activities from the previous year. The estimated value of green bonds issued is expected to surpass $300 billion, reflecting heightened funding for eco-friendly projects.
Embracing Green Finance Initiatives
Governments, corporations, and financial institutions are poised to further embrace green financing initiatives. Regulatory requirements and an increasing realization of the economic benefits tied to sustainable practices drive this momentum. The forecast underscores an ongoing shift towards aligning financial strategies with environmental objectives, fostering a more resilient and environmentally conscious global economy.
Conclusion
Southeast Asia is primed for a surge in green finance, marking a pivotal moment in adopting ESG principles to construct a more resilient and eco-conscious economy in 2024.
Source: Sustainable Fitch, KPM
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https://aquila.is/wp-content/uploads/2023/12/86554_720.png720720Annie Huonghttp://aquila.is/wp-content/uploads/2024/05/aquila-logo320x132.pngAnnie Huong2023-12-18 17:21:452023-12-18 17:21:46What will Southeast Asia’s ESG look like in 2024?
Investment management platforms are digital tools that allow investors to manage their investments online with the maintenance of an investment portfolio, or a collection of financial assets. In 2023 the investment management platform sector in the ESG FinTech landscape is experiencing stable deal numbers, with a decrease in mega-deals compared to 2022. However, interest and investment in the sector remain strong.
Investment activities in the sector are well-distributed globally, with strong representation from the Americas, Europe, and Asia. The overall trend in investment management platforms is very promising, emphasizing its enduring appeal to investors and the financial industry at large.
Steady Deal Numbers:
This stability suggests a mature and well-established market, signaling confidence among investors and stakeholders. The sector’s ability to sustain deal activity in the midst of changing market dynamics speaks to its enduring appeal.
Mega-Deal Slowdown:
In 2022, the sector experienced a notable surge in deal value, largely attributed to the groundbreaking $1 billion acquisition of Australia-based platform Superhero by Swyftx. This mega-deal served as a testament to the sector’s potential for growth and innovation. However, 2023 has not seen a repetition of such mega-deal transactions, with Clean Capital’s $500 million development capital injection from Manulife Investment Management in the US being a notable exception. While mega-deals may be rarer this year, this development underscores the sustained interest and investment in the Investment Management platform sector.
Case Study: Clean Capital and Manulife Investment Management:
The standout transaction in 2023 is Clean Capital’s securing of $500 million in development capital from Manulife Investment Management in the US. This sizable injection of capital demonstrates that, while mega-deals may be less frequent this year, there is still substantial interest and confidence in the sector’s growth potential. Clean Capital’s ability to attract significant funding reaffirms the sector’s position as a focal point for investors seeking sustainable and innovative financial solutions.
Conclusion:
The Investment Management platform sector in 2023 is characterized by its resilience, stability, and sustained investor interest. While mega-deals may not be as prevalent as in the previous year, the sector continues to attract substantial funding from various regions, underlining its enduring appeal and potential for growth. As the industry navigates the dynamic funding landscape, stakeholders can anticipate further innovation, expansion, and a continued commitment to environmental, social, and governance (ESG) principles within the realm of FinTech.
The Monetary Authority of Singapore (MAS) has introduced the Singapore-Asia Taxonomy for Sustainable Finance, a pioneering framework globally. The taxonomy outlines detailed thresholds and criteria for defining green and transition activities across eight key sectors, including Energy, Real Estate, Transportation, Agriculture, Industrial, and others. Notably, it is the first global taxonomy to introduce a “transition” category, acknowledging the unique challenges in Asia’s shift towards a net-zero economy.
The taxonomy employs a traffic light system and a measures-based approach to define transition activities. The former categorizes activities as green, transition, or ineligible, while the latter encourages capital investments in decarbonization measures to eventually meet green criteria. This is crucial for sectors facing challenges in emission reduction due to technological constraints, such as the maritime sector.
Additionally, the Singapore-Asia Taxonomy addresses the early phase-out of coal-fired power plants, providing criteria aligned with a 1.5°C scenario to ensure credibility in the energy transition. The framework also aims for interoperability with global taxonomies by mapping to the International Platform for Sustainable Finance’s Common Ground Taxonomy, promoting cross-border financing flows.
MAS Managing Director Ravi Menon emphasized the significance of the taxonomy, stating that it provides credible definitions for transition activities and covers sectors responsible for 90% of the region’s greenhouse gas emissions. The taxonomy is industry-led, drawing on the experience of financial institutions and real economy players and has undergone four rounds of public consultations. MAS plans periodic reviews to stay aligned with emerging science and technology advancements.
https://aquila.is/wp-content/uploads/2023/12/84833.png514768Annie Huonghttp://aquila.is/wp-content/uploads/2024/05/aquila-logo320x132.pngAnnie Huong2023-12-11 19:40:462023-12-11 20:27:18MAS Unveils World’s First Multi-Sector Transition Taxonomy, Paving the Way for Sustainable Finance Innovation
The landscape of sustainability within Asian companies is undergoing a transformative phase, shaped by dynamic shifts in global standards, operational strategies, and technological advancements.
Recent insights derived from an ERM seminar “The New Era of Sustainability Disclosures” offer an illuminating guide for these enterprises, pointing towards a transformative path to embed sustainability as a cornerstone of their operation. The seminar dissected multifaceted strategies and actionable insights essential for Asian companies in redefining their approaches to sustainability.
ERM’s key takeaways for Asian companies
1. Sustainability is Evolving
The discourse emphasized the evolution of sustainability practices, particularly the alignment with ESG frameworks. This alignment not only simplifies the process of gathering and reporting sustainability information but also acts as a catalyst for Asian companies to embrace new sustainability themes, notably focusing on nature preservation and sustainable supply chains. Embracing these themes not only fulfills societal responsibilities but also augments corporate value.
2. Involvement of Decision Makers for Effective Change
The seminar emphasized the critical involvement of CEOs, CFOs, and board members in embedding ESG factors within core decision-making processes. This active engagement not only signifies a profound shift in business paradigms but also serves as a catalyst for broader corporate action. Furthermore, garnering support from senior management not only reinforces the gravity of sustainability goals but also instigates purposeful initiatives across diverse operational domains.
3. The Importance of a Well-structured ESG Implementation Plan
Executing sustainability initiatives demands scrupulous planning, adequate allocation of resources, and a significant investment of time. The seminar strongly underscored the imperative of devising a comprehensive ESG implementation strategy. This strategic blueprint delineates precise initiatives aimed at accomplishing sustainability goals. By furnishing clarity and direction, this methodical plan empowers respective departments within organizations, fostering a harmonized and targeted endeavor toward fulfilling sustainability objectives.
4. Harnessing Existing Relationships and Digitalizing Data Collection
An essential aspect highlighted was the leveraging of existing relationships to procure relevant data, followed by its digitalization. Understanding the current data landscape and identifying ownership is fundamental. It is subsequently, digitalizing the data collection process streamlines monitoring and evaluation, fostering informed decision-making and enhancing the overall efficiency of sustainability efforts.
Time for action
The insights derived from the ERM seminar offer a comprehensive blueprint for Asian companies seeking to entrench sustainability within their organizational framework. The significance placed on data integrity, assurance, and verification underscores the indispensability of robust governance practices, fostering transparency and engendering trust among stakeholders. Notably, the integration of digitally-enabled collaborative methodologies not only streamlines operations but also enhances cross-functional cooperation, fostering increased efficiency and a culture of innovation.
In navigating the intricate dynamics of an ever-evolving business landscape, the integration of sustainability into the DNA of organizational fabric signifies a commitment to contributing meaningfully to a more sustainable, equitable, and responsible global community.
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Source: ERM seminar “The New Era of Sustainability Disclosures”
https://aquila.is/wp-content/uploads/2023/12/post2.webp15002250Annie Huonghttp://aquila.is/wp-content/uploads/2024/05/aquila-logo320x132.pngAnnie Huong2023-12-04 17:51:542023-12-04 17:51:55Integrating ESG into Asian Organizational DNA
