On how sustainability intersects with business imperatives, Teo cites an example of why Fullerton invested in a green hydrogen company that offers the product at cost parity. “What’s interesting is that the pitch the company has for industrial customers is not buy my green hydrogen because it’s green is good for your reporting, but buy my green hydrogen because it’s the same as what you’re buying grey, and I’m giving you more reliable, better quality hydrogen,” he adds. “Now that narrative sits very well with customers, sits very well with stakeholders, sits very well with your shareholders.”
Similarly, sustainability offers business growth opportunities, suggests Lion Global Investors’ head of ESG Chan Wen Jie. The way he sees it, investors get excited when companies talk about growth prospects. “There are plenty of opportunities associated with sustainability,” says Chan. “The quintessential one being EV battery.”
Chan also believes that sustainability manifests itself in operational efficiency, which is a form of value creation. “If you use less resources to generate the same unit of output, naturally that means lower emissions, and if you use less resource to generate the same unit of output, the same unit of revenue is lower cost and higher profit,” he adds. “If you think about the Venn diagram intersection between sustainability and business, the area that has the largest surface area of intersection is operating efficiency, and it’s a concept that’s so universal that it’s almost applicable to most companies.”
Besides profit, sustainability could also provide more comprehensive analysis for making investing decisions, suggests EQT Group managing director for investment and corporate affairs Joshua Kuma, who also shares his 3Ms for investing — “Money, money, money.“
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“As an investor, we are using sovereign wealth fund money or pension fund money and other investors,” says Kuma. “When we invest, we make sure to bring the investment back.” Kuma is also the honorary secretary at SIAS, or the Securities Investors Association (Singapore). He chairs SIAS’s Green and Sustainability committee, which explores factors that investors should consider when investing and adds that it is important to SIAS that investors not lose money, reinforcing his view on integrating sustainability into investment decision-making.
Bringing an on-the-ground perspective to the discussion, Keppel’s chief sustainability officer, Ho Tong Yen, says Keppel’s experience is in making money from sustainability. Using Keppel Bay Tower as an example, Ho says that the retrofitting of the building into a net-zero energy building contributed to a 30% improvement in net operating income [for the building] and an asset value update of $150 million.
“So that’s something that’s good for the environment, good for stakeholders, and is also commercially attractive, so I think that really it’s about finding these opportunities, and they are out there,” says Ho, who adds that there could be short-term costs involved when integrating sustainability to make money.
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Chan agrees with Ho on short-term costs and suggests that all investment decisions face similar dilemmas on trade-offs. “There’s a cost, there’s decisions, hard decisions about trade-offs in the short term and long term,” he adds. “Some of these sustainable investments can have short-term, immediate benefits, as there are other investments that may be longer term, that have a gestation period, like starting a new business unit and trying to tap into some of this revenue opportunity.”
He adds: “So I think that sustainability investment is not unique by itself; there’s always a trade-off. In the event that companies do need to make trade-offs between short-term performance and longer-term outcomes, I think it’s for companies to be able to communicate that clearly to investors, to help investors understand.”
