Has the Covid-19 pandemic impacted the importance of ESG investments?

Edris Boey (EB): If there is anything that the pandemic has taught us, it is the importance of maintaining our investments in public services, which can help preserve society’s well-being during challenging times. For example, ​​climate-related disasters have exacerbated the effects of Covid-19, with many losing their livelihoods from extreme weather events such as floods, fires and droughts.

Therefore, there is a need for investors and businesses to look beyond propping up their bottom lines and recognise that failing to consider environmental and sustainability issues could lead to very drastic and negative effects on society. 

How did you build your confidence in the ESG market as an investor?

EB: I started off in the sustainability sector as a consultant. The problem-solving skillsets I acquired, along with the business operational knowledge as an in-house sustainability manager, have enabled me to understand and interpret sustainability aspects with confidence. 

At Maitri, I now sit on the other side of a table—as an investor—and it has become clear to me how important it is to understand how things work in the businesses we look at, as we place an ESG lens on the majority of the investment decisions we make. 

For aspiring investors, a good place to start would be to look at a company’s sustainability report and assess how they are measuring their progress against global sustainability reporting standards, such as those established by the Global Reporting Initiative (GRI) and/or the Sustainability Accounting Standards Board (SASB).

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Do you see yourself as a mentor to others interested in sustainability? 

EB: I am very passionate about helping like-minded professionals who are just starting their careers in sustainability. I take a personal interest in nurturing young graduates in the sustainability space, hoping to empower them not only with the right skills and motivation to develop better solutions, but also to progress in their sustainability careers.

How does the growing green bond market play a role in achieving long-term environmental goals? 

EB: Green bonds are a key component of the capital market that raises funds for sustainability projects, and they have been quite effective in promoting green outcomes. For example, analysis by the European Union’s Joint Research Centre found that the carbon emissions of green bond issuers’ assets achieved an average reduction of around four percent, as compared to similar non-green bond issuers.

We are currently witnessing a lot of debate to allow natural gas to be included in the EU taxonomy, given how challenging it is to manage the transition from hydrocarbon fuels to clean energy. This has been exacerbated by the energy crunch across Europe and Asia. If natural gas is indeed added to the EU Taxonomy, we can expect the number of green bond issuers to have a sizeable increase. 

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What does the future of ESG look like? 

EB: The higher the benchmark set by a national government, the tighter the limits will be. At the same time, this will also be accompanied by tighter limits for high emission industries and greater funding for cleantech industries. 

I would expect climate change to feature prominently in any ESG investment strategy over the next few years. The recent COP26 summit, where countries have pledged to phase down the use of coal, reduce methane emissions, and put a halt to deforestation, may be a driving force for change.

For businesses, we expect to see a renewed wave of shareholders and activists asking them to outline their climate action plans or net-zero targets, even if they are not in sectors traditionally recognised as high emitting. This is because investors are increasingly adopting a ‘climate risk’ lens, especially when it comes to evaluating their growth prospects and potentials as an investment option. Hence, companies need to start putting in place a sustainability framework and be ready to deal with tough questions on the environmental and social aspects of their business.

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