Investors’ alert: 2020 could be the year of ‘natural capital’ / 投資者警示:2020年可能是「自然資本」年

Alexandra Tracy, Green Finance Advisor of Friends of the Earth (HK) / 香港地球之友綠色金融顧問 Alexandra Tracy

The year 2020 may be the one in which “natural capital” moves onto the agenda of the mainstream investor community.

Natural capital is a way of thinking about natural resources – such as water, land, forests and clean air – as assets that provide a flow of benefits, or “ecosystem services” to people and the economy.  These services include food and the natural regulation of the environment and climate.

In total, it is estimated that nature provides more than US$70 trillion a year of goods and services essential to a successfully functioning global economy.

However, increasing pressures on nature are degrading the resources on which we depend at an unprecedented rate. Here in Asia, rapid economic growth has taken a high toll from the environment, leading to a deterioration of land, freshwater and marine ecosystems, as well as severe impacts on biodiversity.

Happily, better preservation and management of natural resources is starting to be recognised as a crucial element of the transition to a sustainable and low carbon future.  At UN Climate Week in New York in September, nature-based solutions – such as preventing deforestation, increasing reforestation, improving soil health and safeguarding wetlands and coastal areas – featured prominently. Protecting and leveraging natural ecosystems could provide nearly 40% of the emissions reductions needed to meet the Paris climate agreement’s goal for 2030.

Responding to environmental challenges

In recent years, investors have increasingly been seeking to respond to the challenges of environmental degradation and looming climate change.  This means understanding how the companies in which they invest are themselves taking action to manage these issues, and, in some cases, putting capital directly into investments that both generate a financial return and a measurable environmental result.

Companies that depend on commodities such as timber, palm oil, soy or cattle are under growing pressure from investors to commit to reducing or eliminating deforestation from their supply chains and to prioritise sustainable sourcing.  Some companies are already investing directly in ecosystem protection.

For example, IKEA Group has put millions of dollars into acquiring sustainably managed forest lands to ensure a supply of Forest Stewardship Council certified timber products and paper. Unilever has also made a number of strategic investments in processing facilities and local suppliers in order to bolster its long term sourcing of sustainable palm oil.

Investing directly

Investment in natural capital sectors such as sustainable forestry, agriculture, fisheries, water and natural habitat is accelerating globally.  In some cases, public capital is being leveraged to mobilise private investors, such as through the World Bank’s Forest Investment Programme and a number of initiatives by the Global Environment Facility to protect marine areas, encourage sustainable small scale fisheries and reduce ocean pollution.  The UN Green Climate Fund is also funding several nature-based solutions, including the restoration of wetland and stream ecosystems in four cities in Laos.

Meanwhile, there is growing appetite from institutional investors for funds focusing on natural capital opportunities.  The more established managers, such as Althelia Ecosphere and Ecosystem Investment Partners, have completed a number of capital raises from institutions including pension funds and insurance companies.  More recently the Meloy Fund for Sustainable Small Scale Fisheries, focused on Indonesia and the Philippines, attracted investment from foundations and family offices in the region.

2020年可能是「自然資本」進入主流投資者議程的一年。

自然資本是將自然資源(例如水、土地、森林和潔淨空氣)視為提供給人類和經濟的利益流動或「生態系統服務」資產的一種看法。這些服務包括食物以及環境和氣候的自然調節。

據估計,自然界每年成功為全球經濟運作提供總值超過70兆美元的商品和服務。

但是,對自然日益增加的壓力正以前所未有的速度破壞我們賴以生存的資源。在亞洲,經濟快速增長為環境帶來沉重的負擔,導致土地、淡水和海洋生態系統惡化,並對生物多樣性造成嚴重影響。

令人鼓舞的是,人類現在已開始意識到加強保護及管理自然資源是過渡至可持續及低碳未來的關鍵因素。在去年9月於紐約舉行的聯合國氣候週上,針對大自然的解決方案(例如,防止森林開伐、增加植樹造林、改善土壤健康以及保護濕地及沿岸地區)成為重點討論項目。保護和善用自然生態系統可以實現《巴黎協定》內的2030年目標中所需的減排量近40%。

應對環境挑戰

近年來,投資者越來越尋求應對環境惡化和迫在眉睫的氣候變化挑戰的方法。他們需要了解其投資的企業如何採取行動來處理這些問題,並且在某些情況下,將資本直接投入到既能產生財務回報、又可平衡環境未來的投資中。

依賴木材、棕櫚油、大豆或牛等製品的公司正受到來自投資者越來越大的壓力,他們承諾減少或淘汰其供應鏈中的森林砍伐程序,並優先考慮具可持續性的採購。一些公司現已在生態系統保護上進行直接投資。

例如,宜家家居投資數百萬美元取得受可持續管轄的林地,以確保獲得森林管理委員會認證的木材產品和紙張供應。聯合利華則對加工設施和本地供應商進行多項戰略投資,以支撐其可持續棕櫚油的長期採購。

直接投資

全球可持續林業、農業、漁業、水和自然棲息地等自然資本部門的投資正在加速增長。在某些情況下,公共資本被用來動員私人投資者,例如通過世界銀行的森林投資計劃和全球環境基金的多項倡議,來保護海洋地區、鼓勵可持續的小規模漁業和減少海洋污染。聯合國綠色氣候基金還資助了多項針對自然的解決方案,包括恢復老撾四個城市的濕地和河流生態系統。

同時,機構投資者對專注於自然資本機遇的基金需求也越來越大。一些具實力的資產管理公司,例如Althelia Ecosphere和Ecosystem Investment Partners,已在養老基金和保險公司等機構完成多項融資。而最近,以印尼和菲律賓為主要目標的可持續小規模漁業基金Meloy吸引了該地區的基金會和家族企業進行投資。

現時的ESG標準真的符合社會責任嗎?

香港地球之友綠色金融顧問

社會責任投資(Social responsible investment)已有上百年歷史,近年更加受到重視。不少調查都指出,年輕新一代更關注自己投資組合背後的社會責任,綠色金融因此成為熱門議題,不少基金公司因而成立了所謂ESG 基金,標榜投資背後的社會責任。但ESG基金、或所謂ESG的ETF是否真的更符合社會責任?這個議題值得深思。

現時基金公司若希望成立ESG 基金,他們一般會向第三方服務公司買入上市公司的ESG評分數據,如我們到彭博的數據庫看一看,就知道現時全球有五大ESG 評分供應方,五大供應方的評分標準並不相同,就像信貸評級一般。若再仔細調查這五大評分供應方的評分方法,他們大部分都是以披露比率作為評分,即是某公司在ESG 的國際標準要求的各個披露項目下,披露得愈多愈詳盡,得分愈高,彭博自己就很明顯是用這個標準。這標準表面看起來合理,但深入一層思考,披露比例愈高,只表示公司透明度高,並不表示公司環保及社會責任的表現更好,但為甚麼評分公司不以表現較好作為評分?原因是因為行業不同,規模不一樣,以現時的ESG 國際標準來說,很難將兩間不同公司,以一個相同標準來評定好壞。

除了評分標準的問題,傳統的社會責任投資,最早期的選股方法我們稱為負面篩選,意思是投資方會篩選掉不符合社會責任的某些行業完全不作投資考慮,例如他們不會投資煙、酒、武器、色情等行業。但諷刺的是,在下曾經見過一家在澳門上市的賭場,他們的ESG 報告以現時的國際標準來說近乎完美,如果一個ESG 基金將其納入投資組合,就會變成投資標準比百多年前初期發展的社會責任基金都不如,這是否一個理性選擇?

筆者提出以上的問題,其實是沒有一個正確的意見或答案的,只是給大家思考,亦提醒大家即使買了ESG 基金,也不一定對地球生態有正面影響,只是我們走出了重要的一步、表態的一步,這一步雖然不知是否有效,但最低限度有助推動整個經濟組合向更正面方向發展,請大家不要小看自己的投入。

全球領導人齊呼籲採取緊急行動應對氣候變化 / Global Leaders Calling for Urgent Action on Climate Change

香港地球之友綠色金融顧問Michele Leung / Michele Leung, Green Finance Advisor of Friends of the Earth (HK)

央行與監管機構綠色金融網絡(NGFS)是由一群批中央銀行和監管機構組成,旨在加快氣候和環境風險管理工作。在去年四月發表的第一份綜合報告中,它指出氣候變化是經濟和金融體系結構變化的根源。最近,歐盟公布的《歐洲綠色協議》談到其最新的增長策略,並以2050年或之前成為全球首個達至炭中和的大洲為目標 。同時,英倫銀行發布一份討論文件,提出了2021年氣候相關風險的兩年期探索性方案的建議,目的是測試大型銀行、保險集團和金融系統對不同氣候變化路徑的適應能力。可以按此連結了解更多全球相關政策。

究竟氣候變化怎樣跟財務風險扯上關係? 極端天氣狀況將破壞供應鏈並增加業務成本,並影響資本市場中金融資產的定價。因此,氣候變化無可否認是投資和企業面臨的最緊迫金融風險來源之一。根據國際能源署和國際可再生能源機構於2017年公布的數據,從總體上看,過渡風險造成的損失估計將高達20兆美元。遺憾的是,現時還是沒有很多人意識到或特別關注氣候變化。

在香港,證監會早前發布了《有關在資產管理中納入環境、社會及管治因素和氣候風險的調查》,指出大多數資產持有人期望資產管理公司為氣候風險進行識別、評估和管理。但是,在660間資產管理公司中,只有23%的流程能夠管理實際和過渡風險的財務影響。調查結果亦指出「氣候風險的討論幾乎不會出現在客戶參與過程和風險評估中。」

這個知識鴻溝,能通過更理想的資訊披露和加強對氣候變化相關風險及影響的認識而拉近。受益於法規事務的支持,披露要求現已得以提升,並從性質披露轉型至量化披露。另一方面,企業應開始研究自己的運營手法並分析自家公司的供應鏈和下游影響,例如,其業務是否會受到碳成本上升的影響,還是在容易遭受旱災或水浸等自然風險的地區運營?在了解並意識到風險後,他們將能進一步評估和量化財務風險。在投資方面,資產持有人、資產經理、投資經理和銀行應共同努力,評估他們在投資組合層面上與環境和氣候相關的風險。他們應該開始衡量風險、訂立指標和目標,然後參與並執行氣候變化政策。

總括而言,無可否認法規對於促進及支持有效的氣候政策及整合,扮演著一個基礎及獨特的角色。

The Central Banks and Supervisors Network for Greening the Financial System (NGFS) is set up by a group of Central Banks and Supervisors with the aim to accelerate work on climate and environmental risk management. In its First Comprehensive report launched last April, it stated that climate change is a source of economic and financial risks. Recently, European Union published its European Green Deal which stated as its new growth strategy, it also targets to become the world’s first climate-neutral continent by 2050.  In the meanwhile, Bank of England circulated a discussion paper setting out the proposal for the 2021 Biennial Exploratory Scenario on climate-related risk, with the objective to test the resilience of the largest banks, insurers and the financial system to different possible climate pathways. Please refer to this link for an overview on related global policies.

How climate change is related to financial risk? In simple terms, extreme weather events would disrupt supply chains and increase business costs, which will impact the pricing of financial assets in capital markets. Hence, climate change is undeniably one of the most imminent source of financial risks for both investments and businesses. According to IEA and IRENA (2017), the estimates of losses from transition risk would reach up to USD 20 trillion when looking at the economy broadly. Regrettably, not many people are aware of or paying enough attention to climate change.

In Hong Kong, SFC published the Survey on Integrating Environmental, Social and Governance Factors and Climate Risks recently, in Asset Management, and stated that majority of asset owners expect asset management firms to identify, assess and manage climate risk. Nevertheless, only 23% of the 660 asset management firms have process in place to manage the financial impact of physical and transition risks. It also cited “discussion of climate risks is almost non-existent in client engagement and suitability assessment.”

The gap would potentially be bridged by better disclosures and deeper understanding on the associated risks and impacts from climate change. Thanks to the regulatory efforts, the disclosure requirements have been enhanced and transformed from largely qualitative to quantitative disclosure. On the other hand, businesses should start looking into their own operations and analyze their supply chain and downstream impacts, i.e. are their businesses subject to increasing carbon cost or are they operate in regions that are prone to physical risk like drought or flooding? After understanding and recognizing these risks, they would further assess and quantify them in financial terms. On the investment front, asset owners, asset managers, investment managers and banks should all work together to evaluate their environmental and climate related risks on portfolio-level. They should start measuring the risks, establish metrics and targets, then engage and implement their own climate change policy.

On top of these, and undeniably, the regulation will play a foundational and distinctive role in facilitating and supporting effective climate change policies and integrations.

修訂ESG披露 促進香港競爭力 / Amend ESG Disclosure to Maximise Hong Kong’s Competitive Power

意見交流園地 – Karen Ho / Idea Exchange – Karen Ho

上星期,我們聚焦綠色債券市場,討論香港以至全球的綠色金融發展。

今個星期,我將會講解一下在香港制定政策的官員如何提高股票市場發行人在環境、社會和管治(ESG)數據披露方面的要求。

去年12月,香港交易所發布了ESG報告指引的諮詢總結。他們將修訂上市規則加強ESG披露要求,新修訂將由2020年7月1日或其後開始的財政年度起生效。

要求發行人披露的主要修訂包括:

  1. 加設強制披露要求:
    .載有董事會對ESG事宜的考量的董事會聲明;
    .有關匯報原則──「重要性」、「量化」以及「一致性」的應用;及
    .解釋ESG報告的匯報範圍;
  2. 對公司產生影響的重大氣候相關事宜;
  3. 補充「環境」的關鍵績效指標,並須披露相關目標;
  4. 將所有「社會」關鍵績效指標的披露責任提升至「不遵守就解釋」。

這些改變的意義是什麼?

所有持分者,包括作為散戶投資者的你和我、強積金供款人、專業投資社群、或作為上市公司的供應商或客戶,都能受惠於ESG披露要求修訂,以作出更理想的投資或業務決策。大眾將因此而加深了解企業董事會在迎接「可持續未來」這個新時代中的準備程度、如何確定其業務的重大風險(例如與氣候相關的風險)以及是否設定了目標和指標、以適應不斷增長的ESG需求。

當世界各地的政策官員都將注意力轉向可持續金融,香港在此方面的積極發展將幫助我們在全球保持競爭力。

如欲了解更多資訊,請瀏覽以下網址:
https://www.hkex.com.hk/-/media/HKEX-Market/News/Market-Consultations/2016-Present/May-2019-Review-of-ESG-Guide/Conclusions-(December-2019)/cp201905cc.pdf?la=en
https://www.bloomberg.com/professional/blog/policymakers-across-the-world-turn-their-attention-to-sustainable-finance/

In our blog last week, we discussed about the Green Finance development in Hong Kong and the rest of the world with a focus of the Green Bonds market.

This week we will learn more about how policy makers in Hong Kong has ramped up their requirements to issuers in the equities market in regards to their disclosure on their Environmental, Social and Governance (ESG) data.

In December last year, the Stock Exchange of Hong Kong published their conclusion of the ESG guide consultations. They will strengthen the ESG disclosure requirement by making changes to the listing rule, effective for the financial years commencing on or after 1 July 2020.

Key changes on the required disclosure by issuers include:

  1. New Mandatory disclosure requirements:
    .a board statement setting out the board’s oversight of ESG matters;
    .application of Reporting Principles “materiality”, “quantitative” and “consistency”; and
    .explanation of reporting boundaries of ESG reports;
  2. Significant climate-related issues impacting the company;
  3. Additional “Environmental” key performance indicators (KPIs) to require disclosure of relevant targets;
  4. Upgrading the disclosure obligation of all “Social” KPIs to “comply or explain”

What does it mean to us?

All stakeholders, including you and me as retail investors, or MPF contributors, the professional investing communities, or as a suppliers or customers of a listed company, would now be empowered with improved ESG disclosure to help you make a better investment or business decision. All of us would be able to understand how prepared the Board of a company are in embracing the new era of Sustainable Future, how they identify material risk to their business, such as Climate related risk, and are they setting up targets and metrics and being resilient to increasing demands on addressing ESG issues.

This positive development in Hong Kong, would help us to stay competitive to the rest of the world, while all policy makers across the world has turn their attention to sustainable finance.

For more information, please visit:
https://www.hkex.com.hk/-/media/HKEX-Market/News/Market-Consultations/2016-Present/May-2019-Review-of-ESG-Guide/Conclusions-(December-2019)/cp201905cc.pdf?la=en
https://www.bloomberg.com/professional/blog/policymakers-across-the-world-turn-their-attention-to-sustainable-finance/

綠色金融的回顧與前瞻 / Review and forward looking on Green Finance

香港地球之友董事 麥礎允 / Serena Mak, Board Member of Friends of the Earth (HK)

在2020年剛開始之際,藉著「回顧與前瞻」的主題,讓我們花點時間,看看綠色金融在香港乃至全球的進步。

在香港,令人鼓舞的是,金融機構終於開始向零售公眾發行與綠色金融相關的產品,這也與我們網誌的核心主題相互呼應 ―─ 隨著公眾意識的增強,市民對此類產品的需求將會日漸增加,而供應隨之而來,綠色金融的市場亦會有所增長。

現在同樣是一個良好時機,提醒大家於此網誌中曾不斷提及到的另一項信息―─ 關於綠色金融/可持續發展投資/ ESG(環境、社會與管治)和許多其他主題的標準仍需完善,到現時為止,將投資量化為「綠色/ 可持續」,仍然不像我們盼望般的那麼容易和透明。

也許我們能夠從中汲取教訓的,是綠色債券市場的發展。最近,我閱讀了國際貨幣基金組織 (IMF) 出版刊物中的一篇文章。綠色債券市場規模已顯著增長,單是2019年的上半年,綠色債券的發行量便超過1,000億美元。但是,一些被歸類為「可持續投資」的項目引起了一些懷疑(例如,歐洲石油公司出售的一些債券),投資者希望了解清楚他們的投資究竟有多少是確實投入到「可持續金融」計劃的。

針對此類懷疑,我們能從中學到的是,作為投資者,我們需要仔細選擇和審查綠色/可持續金融類別的投資項目,並確保自己了解投資對環境的影響,以便能投入資金來提供金融資源予真正對未來產生積極影響的項目。

如欲了解更多,可瀏覽以下網頁。

https://www.imf.org/external/pubs/ft/fandd/2019/12/pdf/green-bonds-offer-lessons-for-sustainable-finance-beschloss.pdf

https://www.climatebonds.net/files/files/H1%202019%20Highlights_final.pdf

At the beginning of 2020, following the theme of ‘review and forward looking’, let’s also take a moment to look at how far Green Finance has progressed in Hong Kong and also around the world.

In Hong Kong, it is encouraging to see financial institutions finally started to issue Green Finance related products to the retail public, this echoes with one of the core themes of our blog here as well – with public’s increased awareness, the demand for such products will increase, supply will follow, and the market for green finance will grow.

It is also a good timing for us to be reminded about another message that resonated throughout our blogs – that standards around green finance / sustainability investing / ESG and many other topics, still need to be refined, so quantifying an investment to be ‘green / sustainable’ still is not as easy & transparent as we would like it to be.

Maybe one lesson we can learn from is the evolution of the market for green bonds. Recently, I came across an article from IMF publication. The market for green bond has grown significantly in size, and in first 6 months of 2019 alone, issuance of green bonds has gone above USD 100 billion. However, some projects that are classified as ‘sustainable investing’ has raised eyebrows (e.g. some bonds sold by European oil companies), and investors are asking questions on how much of their investments has really gone into ‘sustainable finance’ initiatives.

So lesson for us is perhaps that as investors, we need to carefully select and review the investments in the Green / Sustainable finance category, and ensure that we understand the environmental impact of our investment, so that we can all chip in to provide financial resources to projects that will really have a positive impact for the future.

More information can be found at these links.

https://www.imf.org/external/pubs/ft/fandd/2019/12/pdf/green-bonds-offer-lessons-for-sustainable-finance-beschloss.pdf

https://www.climatebonds.net/files/files/H1%202019%20Highlights_final.pdf