The Growth of Impact Investing

Michele Leung, Green Finance Advisor of Friends of the Earth (HK)

Impact investing is defined with the objective to generate measurable social or environmental benefits, alongside with financial returns. The investors typically with a mindset that want their investment to make a difference in the world. According to an industry study*, 95% of millennial investors or 85% of individual investors are interested in sustainable/impact investing.

There is increasing interest to apply the principles of impact investing to private and public equities. Particularly for public equities, the impact can be quantified by defining actionable impact themes (basic needs, natural capital) and sets of solutions (i.e., major diseases treatment, sustainable water), then calculating company revenue exposure to products and services with positive social or environmental impact.

The 17 UN Sustainable Development Goals (UNSDGs) were agreed by 193 countries in 2015 with a target date for delivery of 2030. The SDGs aim to foster collaboration within and between international private and public stakeholders to address critical global challenges such as poverty, inequality, and climate change.

Companies’ contribution to SDGs can be analyzed based on their operations, the product, and services they provide, rather than solely relying on companies self-declared alignment with the goals. With this type of analysis, investors can identify companies that are better aligned with the SDGs, measure, and report on the degree of SDG alignment while also to comply with client mandates around SDG alignment. Most importantly, they can potentially meet the rising demand to channel capital towards addressing the objectives by the SDGs. 

*Source: Morgan Stanley Institute for Sustainable Investing. Sustainable Signals: Individual Investor Interest Driven by Impact, Conviction and Choice (September 2019)


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【今期綠色金融活動一覽】

雖然十一月已經過了一大半,但我們仍有許多精彩的綠色金融活動推介給大家。如欲參加和綠色金融有關的活動,或想了解甚麼是綠色金融,歡迎瀏覽以下網址了解更多。

[1]     ACGA Virtual Conference 2020 – Asian Business Dialogue on Corporate Governance

[2]    Outlook 2021 – The Unrealized Potential of Impact Investing in the APAC Region

[3]     2020 GRESB Real Estate Results – Asia

[4]     Engaging as a Sovereign Bondholder

[5]     Corporate Sustainability Summit

[6]     Panel discussion: The why, the what and the how (This event is part of Climate Risk Week Asia)

[7]     Climate Risk Asia Week – Measuring, Managing and Mitigating the Threat From Climate Change


瀏覽香港地球之友網頁 www.foe.org.hk 了解更多
綠色金融 Facebook 專頁: https://www.facebook.com/greenfinancefoehk/
香港地球之友 LinkedIn 專頁: https://www.linkedin.com/company/friends-of-the-earth-hk/

What will US climate policies look like when President-elect Joe Biden takes office?

Green Finance Advisor of Friends of the Earth (HK)

U.S. climate change policy is set for a different approach, following the results of the Presidential election. This article aims to take a look at the President-elect Joe Biden’s plan on the climate change policy and some of his climate action goals.

Electric Cars/ Automobile Emission

Biden mentioned he aims to get the US back on track to reach net-zero carbon emissions by 2050, in line with the Paris-Agreement. He also plans to implement a federal procurement program for clean vehicles and set a goal for all new American-built buses to be zero-emissions by 2030. To achieve this, he plans to endow US$2 trillion into research and development goals, including creating millions of construction , skilled trade and engineering jobs to build the new infrastructure while providing pathways for workers of all ages and people from background.

He aims to work to increase demands for American-sourced clean vehicles, especially in fleets, while encouraging consumers and manufacturers to move to electric vehicles through programs, one of which is the Clean Cars for America proposal to replace old automobiles.  

With a view to improve the electric vehicle growth, he also aims to accelerate battery research and plans to procure US$ 400 billion for batteries, electric vehicles and upgrading of industrial manufacturing processes over the next four years.  This includes creating a new Advanced Research Projects Agency on Climate that examines on a variety of low-carbon options and technologies.  He eagers to beef up the supply chains for clean industries, invest in national labs and etc.

Climate Diplomacy

Biden would return the US to a leadership role on climate change, re-entering the US in future climate negotiations to advance the goals of the 2015 Climate Agreement, the global pact made five years ago among nearly 200 nations to avoid the worst impacts of climate change.   Biden said he will bring the U.S. back into the Agreement as early as February 2021.    

The Agreement is a non-binding agreement amongst nations to reduce emissions and keep the increase in global temperatures well below 2 degree Celsius, or a 3.6 degrees Fahrenheit, compared with preindustrial levels.

Once the U.S returns, the agreement requires countries to set voluntary targets to reduce domestic emissions and create stricter goals in coming years.  The Paris Agreement has also implemented a binding requirement that countries are required to accurately report their progress.

It is apparent that Biden’s environmental plan and goals will be a huge undertaking, but it will set the U.S. on the right path to being environmental.


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綠色新常態 疫下的可觀生意

香港地球之友綠色金融顧問 黃俊璋

證券及期貨事務監察委員會(證監會)本月就可持續發展議題展開諮詢,要求基金經理在投資及風險管理流程中考慮氣候相關風險,並須作出適當的披露,藉此滿足投資者對於氣候風險資訊愈見殷切的需求,以及打擊「漂綠」行為。

然而,「漂綠」的概念並非源於基金經理,若要規管更是應該從源頭著手,打擊掛上環保旗號卻無實質作為的企業。

其實一直以來大多數的企業管理層認為,企業的最大著眼點為盈利,而最需關注的持分者便是股東,因此應盡一切可能將股東利益最大化。隨著疫情來襲,讓企業意識到,政治、社會及經濟環環相扣,當中的「不確定性」將成為常態,而去年底由美國200間企業的行政總裁所組成的「商業圓桌會議」,更是重新定義企業在社會中的角色,並強調「不再把股東利益當唯一依歸」。

疫下先鋒  門門有道

面對新的營商環境,企業在追求業務增長之餘,更會探討如何將不同的社會持份者納入為營商策略的一部分,創造商業機構與社會共贏的「商社共生」(Creating Shared Value)方針。

近年新興的植物肉便是一大例子,避免了進食肉類會導致碳排放加劇的問題,雖然對環境有百利而無一害,但礙於成本高昂,因此在普及到大眾市場一直具有相當的阻力。

但在疫情下,肉類價格因短缺而上漲,令新興的植物肉與前者差價縮小,令許多消費者願意踏出第一步嘗試,為植物肉市場提供一個契機。同時,由於居家煮食及外賣的風氣盛行,植物肉企業亦把握機遇與本地大型飲食品牌合作,供應及推廣植物肉新產品,讓低碳飲食方式變成新的選項,成功打進大眾消費市場。

循環經濟  變廢為寶

雖然香港相對內地市場在環保議題起步較早,但香港近年在推展環保策略上卻停滯不前,因此屢被不同國家與地區迎頭趕上。 

「循環經濟」的概念早1970年代已存在,旨在最終實現可持續發展的目標,其要義是善用創新科技,讓資源與廢棄物在生產流程中多次循環再用,以求減少能源與物料的消耗,並將中途廢棄物料加工升級,以供再用。

至今,香港鮮有環保項目應用上「循環經濟」的概念,相反,內地各地省市已相繼有相關的突破性進展。

以位於江蘇省的蘇州工業園區為例,當地常住人口超過110萬人,面積高達288平方公里。相比下香港島的面積僅約80.5平方公里,即蘇州工業園區是3倍多的香港島之大。

位於園區內設有廚餘處理及應用的廠房外,還有污水處理廠和天然氣接收站,二者與鄰近的污泥處理廠和熱電廠共同組成一個綜合性回收體系。通過每天處理高達500公噸的廚餘以及綠色廢棄物,將過程中產出的生物氣體、沼渣、污水等加工,變成能支援日常生活、業務營運的可靠能源,部分的成品,如生物燃料,更可出口至歐洲,獲取可觀利潤,成功將「循環經濟」的概念應用,變成一門可自給自足的開心生意。

俗語有云「有危自有機」,疫情對全球社會造成危機,影響民生,衝擊經濟,對商界的影響更甚;但同時亦是契機,是一個新常態的開端,科技股不斷上揚便是很好的例證,而重點在於大家能夠把握時機,迎合潮流。


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What is greenwashing?

Green Finance Advisor of Friends of the Earth (HK)

Cambridge Dictionary says greenwashing is designed “to make people believe that your company is doing more to protect the environment than it really is.”

There is a growing concerns on Fund Managers, or Corporations (listed companies or corporate bond issuers, or loan lenders) who did less than what they claimed on addressing environmental (or sustainability) issues as a marketing strategy.

In Hong Kong, regulators see the needs to meet investors’ growing demands for climate risk information and combat greenwashing. SFC has just launched a consultation on proposed requirements on 29 Oct 2020 for fund managers to take climate-related risks into consideration in their investment and risk management processes and make appropriate disclosures. Under the proposals, the Fund Manager Code of Conduct (FMCC) would be amended and the SFC will set out expected baseline requirements and standards to facilitate fund managers’ compliance.

Key Points that you should know:

  • It applies to fund managers which manage collective investment schemes (CISs) but at the initial stage they would not be mandatory for fund managers which manage discretionary accounts (in the form of an investment mandate or a pre-defined model portfolio)
  • It covers four key elements: A) governance, B) investment management, C) risk management and D) disclosure.
  • A, B, and C apply to fund managers which have discretion over investment management and risk management processes irrespective of whether they are overall responsible or manage only part of a fund; D applies to fund managers which are responsible for the overall operation of funds
  • Different disclosure levels (Baseline vs Enhanced) – Fund Managers with AUM HKD 4 Billion (USD 516M) or above are “Large Fund Managers”
  • Large Fund Managers are expected to adopt a more robust approach and make more detailed disclosures e.g. Large Fund Managers would be required to make additional quantitative disclosures of weighted average carbon intensity (WACI) of Scope 1 & Scope 2 GHG emissions at a fund level. Small Fund Managers would still be expected to disclose on Entity levels if climate risk is deemed to be relevant
  • Other example requirements: applies to ETF, following TCFD framework, Scenario Analysis
  • Consultation close on 15 Jan 2021, proposed transition periods: 9-12 months


FoE (HK) encourage market participants to respond to SFC to voice out your opinion!


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