The annual PRI in Person event took place in Singapore this week. This is our selection of some of the interesting developments:
What’s the definition of long-term? That was the question that Hiromichi Mizuno, Chief Investment Officer of the Government Pension Investment Fund of Japan posed to the audience and fellow panelists at a session on long-term investment: “What sort of time frame are we talking about?” Moderator Martin Skancke of the PRI answered that it was the capacity to hold an asset that you aren’t forced to sell. Mizuno explained that the GPIF, which has a 100-year time horizon and which recently issued a tender for ESG indices, said there is no point investing for your grandchildren’s retirement if they can’t go outside because of climate change and pollution. The fund’s focus, he said, is on working on agency issues in the investment chain and aims to be, in effect, a “world class fund of funds or manager of managers”.
Speaking on the same panel, Anglien Kemna, Chief Finance and Risk Officer at APG Group, said there are now a lot of external managers “who don’t want to do business with us” because of the Dutch giant’s focus on costs. “Our costs are coming down dramatically without affecting performance”.
VBDO, the Dutch sustainable investment body, presented work it is doing on behalf of Lilianne Ploumen, the Dutch Minister for Foreign Trade, to study the feasibility of a global responsible investment benchmark. The VBDO is consulting with stakeholders and is looking to see how the project can go forward.
Xander den Uyl, a board member at both ABP and the PRI, speaking at the VBDO event, described how the Dutch public sector pension fund aims to boost its exposure to sustainable investments and renewable energy. But he said: “It’s not always easy, I can assure you. Investments are hard to find”.
Bronwyn King, the Australian doctor who is head of Tobacco Free Portfolios, told a side-event that she is talking to three banks about their lending to tobacco companies. She spoke of “de-normalising” tobacco investment, adding that it was also a child labour issue – and that it’s usually children who start smoking. The industry, she said, externalises its costs (healthcare etc.) but privatises the profits “and that can’t go on forever”.
Dr. Ma Jun, Chief Economist at the People’s Bank of China, in a video presentation to the event, called for greater transparency from asset managers about “enhancing the greenness of your portfolios”.He also wanted more product supply, such as green indices and green funds, as well as cross-border green investment and more local-currency green bonds. A key problem holding back green investment, he said, was a lack of definition for green equities and green funds – which entailed “search costs” for investors. “There’s too many definitions, and that’s a problem.”
CalPERS board member Priya Mathur, speaking on a panel about green finance, explained how the giant California fund has set out its ESG agenda for the next five years, though it has invested in just one green bond, from Georgia Power. She said: “Our own allocation of capital doesn’t reflect a significant commitment at this point.” She called for clearer standards and greater disclosure and wanted greater involvement of asset owners at the renewable energy project development stage.
Nick Robins, of the Inquiry into the Design of a Sustainable Finance System, said the fact that finance ministers and treasuries were now talking about green finance was “quite profound”. It’s not just about institutional investors, but banks too — and the relationship between investors and banks — he added.
Responsible investors need to base any divestment decisions on seafood supply chain issues on a real assessment of risks and not just media reports, said Darian McBain, Group Director of Sustainable Development at listed fisheries firm Thai Union. A former sustainability consultant, she spoke of “very poor” media reporting of the issue, which has seen Thai Union in the spotlight.
A talking point during a session with Singapore stock exchange CEO Loh Boon Chye was the SGX’s decision recently to look at dual-listing of companies’ shares. Companies with very different forms and business models must have the means to access to capital markets, he said, such as early stage companies. Was it a slippery slope that would see the idea taken up across the region? He didn’t think so as each market was quite different. “I don’t think there’ll be many copy cats,” he said.
Perhaps the last word should go to Sophia Cheng, CIO of Taiwan’s giant Cathay Financial Holdings, who suggested thinking in terms of Responsible ABC (Allocation, Business and Communication). Speaking from the floor during a session on the blueprint from responsible investment, Cheng illustrated her remarks with a large drawing with heart-shaped emojis. “You’ve got to give it some heart,” she said.