Month: March 2020

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

It’s unbelievable to see what have happened in the world in the last 2 months. “Working from home’ and ‘social distancing’ become the new norm and we all have to embrace the new way of life. What wake you up during the night? Are you worried about being one of the “confirmed case”? Are you concerned about the impact to your business and job security? Are you scrambling to see the arrival of a bear market with your investment and currency being devalued?

With all those worries in your mind, is or should “Sustainability” become a lower priority?

Perhaps we can try different angle to rethink what we can learn from the Coronavirus Pandemic. Yes – many businesses are impacted, but which industries or companies are least impacted and actually could potentially benefit? Which companies or projects or sectors are more resilient to the disruptions to our economy?

What is obvious is that there would be a long-lasting effect on tourism and oil consumption. Both oil & gas and travel & leisure shares have been hammered in the last 2 months. The aerospace sector has also had a tough time. The crisis has also pushed investors toward defensive stocks or investments. This pandemic is proving the importance of pharmaceutical, health care, food and household goods. A sustainable business and investment are what we should focus now.

Who would have guessed, 2020 started with such a disastrous and painful experience to many of us?

“This is teaching all of us lessons about what it really means to stress test and model extreme scenarios,” said Emilie Mazzacurati, founder of Moody’s unit Four Twenty Seven Inc., a physical climate risk data firm. “We need to be able to think and stretch our imagination beyond what we have seen historically—in this case things that were unthinkable a few weeks ago, such as airlines shutting down and not driving, are now in place.”

Source: https://www.bloomberg.com/news/articles/2020-03-25/coronavirus-is-a-stress-test-for-future-climate-shocks?srnd=green

全球於過去兩個月裏發生的事，真是令人難以置信。「在家工作」和「社交疏遠」成為新的社會規範，我們所有人都必須接受新的生活方式。晚上睡覺時甚麼把你弄醒了？你擔心會成為「確診案例」之一嗎？你是否擔心疫情對業務和職業安全的影響？看到熊市的到來，你會否為你的投資和貨幣貶值狀況而焦急起來？

在這些擔憂下，「可持續性」應該繼續被視為次要事項嗎？

也許我們可以嘗試以不同的角度重新思考人類從冠狀病毒大流行中可學到的知識。是的，很多企業受到影響，但是哪些行業或公司受到的影響最小、或實際上可能受益了？哪些公司、項目或行業在經濟衰退時更具彈性？

最顯而易見會受到長期影響的，便是旅遊業和石油消費。石油和天然氣、以及旅遊和休閒股在過去兩個月中均表現欠佳，航空太空業也度過了艱難的時期，這場危機還迫使投資者轉向支持防禦性股票或投資。另外，這場大流行亦證明了製藥、醫療保健、食品及家庭用品的重要性，我們現在最需要重點關注的是可持續的商業和投資。

誰曾想過，2020年剛開始，便為我們帶來如此災難性和痛苦的經歷？

穆迪（Moody）旗下、實體氣候風險資料公司Four Twenty Seven Inc.的創始人Emilie Mazzacurati表示：「（此次危機）正正給予我們學習的機會，了解進行壓力測試和模擬極端情況是怎樣一回事。」「我們需要有能力超越過去的歷史經驗，思考並擴大我們的想像力，幾周前我們無法預料的事情，例如航空公司關閉和停止運作現在已出現了。」

資料來源：https://www.bloomberg.com/news/articles/2020-03-25/coronavirus-is-a-stress-test-for-future-climate-shocks?srnd=green

【意見交流園地】Johnny Wei, Analyst for Bloomberg New Energy Finance

根據彭博終端數據，2019年中國內地再度蟬聯全球第二大的綠債發行國，即使只考慮符合國際標準的總發行量，也達到298億美元——這個金額大約是同年本港綠債量的10倍。

內地的綠色債券，從2015年開始發行第一隻，翌年即達到全球最大，並將該優勢保持到2017。除了典型的綠色債券，內地已發展出綠色資產證券化（Green ABS）、綠色公募基金、可持續發展表現掛鉤貸款（Sustainability-linked Loan）等多種綠色金融形式。

自2018-2019年，由於美國在Fannie Mae（房利美）一家機構上發行巨額的相關綠金產品，超過了所有其它對手，故此連續兩年由美國奪得頭籌。

如果以經濟體考慮，歐盟才是最大的發行整體。其不僅有法國、德國、荷蘭、瑞典等積極參與綠色金融的成員國，作為超主權主體，歐盟本身都有跟進綠債的發行、標準審定等工作。

實質上，我們站在今日回眸，已經看到綠色金融成為世界主要經濟體的最新一個競爭前沿。

香港終於在去年5月推出1,000億港元的「主權綠色債券」，帶動了一批地產商拿出自己的方案。但配套政策其實仍不足夠。與先進國家相比，本港在製定綠色標準、啟發發行人使用綠色產品、吸引偏好綠色的全球投資者方面，仍有距離——新加坡、東京、甚至鄰近的澳門，目前在綠色金融方面的野心亦已清晰可見。

一家公司、一個行業、一片地區，參與綠色金融的好處不僅包括降低融資成本和提升社會聲譽，事實上還能進一步，幫助它在全球範圍搜羅優質資金，定位未來持份者。如果採取常規金融途徑，它可能永遠不能企及最前瞻、最負責任的投資者。

放眼神州，2015年底，中國推出《綠色債券支持項目目錄》，成為全球首個對綠債推出官方版範疇定義的國家。 2018年9月，中國證監會修訂《上市公司治理準則》，規定上市公司要將生態環保要求融入發展戰略和公司治理。

針對之前部分綠債評估「欠綠」、有欠嚴格的問題，中國證監會現已跟人民銀行聯合發布《綠色債券評估認證行為指引》，務求強化對綠色項目的盡職調查，令全球投資者更為放心。其後在2019年，人民銀行牽頭對《綠色債券支持項目目錄》進行修訂，焦點交鋒在於能否移除「清潔煤技術」——困難來自政府內外的不同持份者，但總算在凝聚改革向前的​​共識。

英國《金融時報》在情人節報導，美國華爾街（Wall Street）高級管理層已開始找到了新的綠色「情人」——他們發現，如果不回應投資者和社會對於應對氣候變化的訴求，很可能最後會兩敗俱傷。報導說，這種感受和壓力，在華爾街從未如此強烈。如果各地的渾身解數，本港仍看不到、不跟上，我們就會白白錯失世界金融發展的新機遇，以後能否繼續擔當亞洲金融中心，終有一日會成疑。

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

As the coronavirus continues to create difficulties for us in our daily lives, perhaps one surprisingly welcome outcome from the outbreak is the attention it has brought to another significant challenge for our region – dealing with waste. 

Newspaper articles last week (https://www.scmp.com/news/china/society/article/3065049/coronavirus-china-struggling-deal-mountain-medical-waste-created) reported that China is struggling to deal with a “mountain of medical waste” created by the epidemic, noting that “tonnes of discarded face masks pile up around the country.” 

The capacity of China’s waste treatment industry to handle the current volume of clinical waste is woefully inadequate.  A significant number of dedicated incineration facilities were built after the SARS outbreak, but most are near the end of their operating lives, according to the Ministry of Ecology and Environment.

While medical waste is particularly in focus at the moment, this is just part of the larger problem of the waste treatment sector across the region.  Solid waste, in particular single use plastics, is still managed extremely poorly, with huge amounts of plastic pollution ending up in the ocean.

In addition to the weak oversight of waste treatment in some Asian countries, insufficient investment is a major factor constraining improvements in refuse management.  A recent Ocean Conservancy report identified a net financing gap for plastic waste collection of between US$28 and US$40 per ton in the top five ocean polluting countries in the world: China, Thailand, Indonesia, the Philippines and Vietnam.

Policy makers and companies are beginning to prioritise better waste management, but the financial markets need to catch up.  Just 4% of green bonds issued to date explicitly tackle waste reduction.  Only three companies globally have completed specific fund raisings, although other corporates, such as Apple, have dedicated part of their green bond proceeds to waste reduction.

But there are also positive signs of investor interest in tackling the solid waste problem in Asia, especially targeting ocean clean up.  For example, Circulate Capital recently announced the launch of a US$106 million fund to reduce plastic pollution in the ASEAN region by investing in treatment and recycling, as well as new materials.  The company has reportedly identified more than two hundred potential investment opportunities.

According to the International Finance Corporation, as much as US$120 billion of value is lost through packaging that enters the environment.  This presents a huge opportunity for investors.  Better prevention, reuse, recycling and energy recovery could also achieve significant emissions reductions, which could be as much as 15% of the global total.

新型冠狀病毒疫症持續為人類的日常生活帶來麻煩，但這場疫症亦有可能同時提醒著我們、並帶出了亞洲地區另一重大挑戰 – 廢物管理。

上週有傳媒報導（https://www.scmp.com/news/china/society/article/3065049/coronavirus-china-struggling-deal-mountain-medical-waste-created），中國正努力應對這場疫症造成的「海量醫療廢物」，並指出「全國各地堆積了大量廢棄的口罩」。

中國廢物管理工業處理當前醫療廢物量的能力嚴重不足。根據中國生態環境部所述，大量的專用焚化爐都是在沙士爆發後建成，但大多數的使用壽命將至。

儘管目前我們最為關注醫療廢物，但這個問題只是亞洲地區廢物管理上的一部分而已。都市固體廢物、特別是一次性塑膠的管理仍然非常不足，大量的棄置塑膠最終還是排進了海洋。

一些亞洲國家除了在廢物管理上監管不足外，缺乏足夠投資也是限制著廢物管理改善的主要因素。海洋保護協會（Ocean Conservancy）最近一份報告指出，全球頭五大海洋污染國家：中國、泰國、印尼、菲律賓及越南，他們的塑膠垃圾收集的淨資金缺口為每噸28美元至40美元。

政府和企業已開始陸續把優質廢物管理優先排序，但是金融市場仍必須盡快迎頭趕上。迄今為止，僅有4％的已發行綠色債券明確地投放在減廢措施，而儘管蘋果公司等企業已將其綠色債券收益的一部分專門用作減廢，全球仍只有三間企業完成相關籌資。

即使如此，現時還是有積極的跡象表明，有亞洲投資者有興趣解決固體廢物問題，尤其是針對海洋清潔。例如，Circulate Capital最近宣布啟動一項總值1.06億美元的基金，投資在垃圾處理、回收以及發展新材料，減少東盟地區的塑膠污染。據了解，該公司已經發現了多達200個潛在投資機會。

根據國際金融公司（International Finance Corporation）的數據，產品包裝物料長期流入環境，造成高達一千二百億美元的損失。此數據正代表著投資者的龐大機會，當中包括更理想的預防措施、循環再用、回收和轉廢為能，這也可以實現大幅度減排，數量能高達佔全球總量的15％。

Photo source / 圖片來源：United Nations Environment Programme Flickr

黃思靈 香港地球之友綠色金融顧問

全球最近應該都在努力抗疫吧？每天新聞報導的都是新增了多少確診個案，口罩、消毒用品的行情… 大家覺得這疫情其實跟ESG有沒有關係呢？

筆者並非想暗示災害是人為，但危機發生了，追究原因固然重要，但如何應對卻是更刻不容緩，同時也是體現ESG價值的時候。ESG的核心其實就是透過管治，從而減少對環境、社區的影響，或是在危機爆發時有足夠準備，降低損失。因應新型肺炎，大家都避免上街，那平常的經濟活動怎麼辦？在家工作、叫外賣、線上繳費、更多的網購… 原來大家都還真有本事長期宅家不出門，只是這一切都需要事先準備好，有配套才行。所以無論一個國家、一個政府、一家企業，想要持續發展，都應該認真看待ESG。

社會已經享受慣現代的消耗模式，要回復過去原始簡樸的日子根本不可能。日常生活中徹夜響應ESG有點複雜，但利用ESG或sustainable investment可能相對簡單，把錢投放到對ESG有利的項目，間接鼓勵和支持ESG發展。筆者最近才發現，原來世界銀行在2017年伊波拉病毒後發行了一個「瘟疫債券」，債券給予持有人最高逾一成的高息，只是萬一觸發符合疫症大流行的條款，則把部份資金用作支援發展中國家抗疫，不會全數發還本金。至於武漢肺炎，中國監管機構亦鼓勵發行「肺炎債」，把審批過程從數星期縮短到幾天，同時敦促國有銀行購買這些債券。發債企業亦必須承諾將至少10%的集資金額用於抗疫。而自2月起計，已有超過25家中國企業發行「肺炎債」，合共融資240億元人民幣。

截至今天，筆者已經有一個多月沒有步出過家門了。希望這種困難的日子快點過去，大家在使用大量一次性口罩來保障自身的同時，也可以想想如何在ESG方面一同出一分力，這才能改善以後的生活質素喔！

Green Finance Advisor of Friends of the Earth (HK)

Arguably the greatest driver of innovation and growth in our capitalistic society is the attachment of a financial value to a measurable metric. This has been the underpinning motivation for many bright scientists and entrepreneurs throughout our modern age in its quest for more, and as the system has promised, those who succeed have been rewarded handsomely through financial means.

However, the endless pursuit of growth in the modern era has resulted in significant and perhaps unsustainable alterations in our very own biosphere, be it the rising average annual temperatures, increasing risk of drought, and the ever-present threat of rising sea levels to our coastal habitats. In the face of these risks, our society seems to have delegated the responsibility of solving issues of sustainability to multilateral government organizations and not-for-profit bodies. And since the Kyoto protocol in 1997, it is not surprising that an observer would argue that real progress has yet to be achieved. Perhaps we should take a lesson from the corporate world by financialising negative externalities and thus attaching explicit financial value to metrics of sustainability? Then perhaps a few bright minds of our generation would pursue sustainability as they would grow in the traditional capitalist sense?

Coase Theorem and the Cap and Trade Program

In fact, the financialization of sustainability metrics is not new. Ronald Coase, one of the fathers of modern economics in his Coase theorem states that “if trade in an externality is possible and there are sufficiently low transaction costs, bargaining will lead to a Pareto efficient outcome regardless of the initial allocation of property…given clearly defined property rights…the result is the economic efficiency of an economic allocation or outcome” (Coase 1960).

Formulated in 1960, this theorem has been the foundation of the cap-and-trade (CAT) market used in the US Acid Rain Programme and the European Emission Trading Scheme (EU ETS). These programs have proven that market mechanisms based on Coasean bargaining is an effective solution in the integrated approach of tackling sustainability issues through the combination of public policy and private initiatives (Chou, Ho 2018). The policymakers define the property rights and set a ceiling for the production of negative externalities, leaving private participants to find an economically efficient bargaining outcome that drives forward measures of sustainability.

Integration into Financial Reporting and Corporate Performance Measurement

While current gradual standardization of Corporate, Social, and Governance reporting in corporate financial reports is a good step forward, it does not do enough to motivate corporate stakeholders in their quest to achieve sustainability targets. Given the effectiveness of previously discussed applications of Coasean bargaining, perhaps we should consider a broader reform of our capital markets.

This could take the form of an inclusion of a range of financialized negative externalities metrics into standard financial reporting which would have direct impact towards a corporation’s share price performance. For example, iPhone’s parent company Apple is estimated to earn around 177% gross margin per iPhone it sells, however, this does not account for the negative externalities it incurs during its production process. For instance, the loss of food production from the conversion of agricultural land into factories, or the industrial waste which pollutes nearby rivers and contaminates land. Introducing financialized metrics of negative externalities into Apple’s financial reporting would certainly cause the relevant stakeholders to strive for sustainability in a measurable way.

This proposal will certainly encounter significant and substantial pushback given the vested interests in our current system, however in the face of imminent threat to the odds of mankind’s survival in this biosphere, isn’t it worth every effort from public policymakers as well as private stakeholders to pursue?

References
Coase, R. H. (1959). The federal communications commission. The Journal of Law and
Economics, 2, 1–40 (Oct).
Coase, R. H. (1960). The problem of social costs. The Journal of Law and Economics, 3(1),
1–44.
L.H.T. Choy, W.K.O. Ho (2018). Building a low carbon China through Coasean bargaining. Habitat International 75 (2018) 139–146
Su, J (2018). The $1,250 iPhone XS Max Costs Apple $450 To Make, Nearly A 200% Profit Margin. Forbes Online (https://www.forbes.com/sites/jeanbaptiste/2018/09/27/the-1250-iphone-xs-max-costs-apple-450-to-make-nearly-a-200-profit-margin/#5596414d4966)