The WHO announcement came after its independent emergency committee on the COVID-19 crisis agreed it no longer merited the organisation’s highest alert level and “advised that it is time to transition to long-term management of the COVID-19 pandemic”. But the danger was not over, according to WHO chief Tedros AdhanomContinue Reading
The failure of the US Marine Corps to respond to recent crises is inexcusable. The Marines are supposed to be “most ready when the nation is least ready.”
Marine Corps Commandant General David Berger told a United States congressional committee the other day that he had let down the “combatant commander.” The United States Marines Corps was unable to have Marines in position to assist US citizens during the ongoing fighting in Sudan and to provide assistance after a recent earthquake in Turkey.
But he’s not quite right. He also let down his nation.
The backbone of the Marine Corps’ global rapid response to crises is the three marine expeditionary units/amphibious ready groups (MEU/ARG) that are constantly “floating” worldwide. One of these is typically made up of three amphibious ships (the ARG) and a couple thousand marines (the MEU) with all their hardware, weapons, and aircraft.
They are just as capable of saving lives as they are of taking them.
The MEU that should have been on hand to respond to Sudan and Turkey was in North Carolina. Thus, it had left the region uncovered.
In the event, the United States flew in a rescue force of Navy SEALs from Djibouti to evacuate the 75 or so Embassy personnel and dependents from Khartoum. That was a success.
As for the other thousands of American citizens in Sudan, the US government’s response to shelter in place or get yourself out was the equivalent of, “See ya, wouldn’t want to be ya.”
The French and the British did better at getting in and assisting. And the Chinese did too. Indeed, Global Times crowed about the Chinese Navy‘s efforts to evacuate over 1300 Chinese from Sudan — and other nations’ citizens as well.
This was a far cry from the days when Americans overseas knew that the Marines would be coming. And the local authorities — or warlords — did as well.
Read the commandant’s statements and it’s the US Navy that’s to blame as it hasn’t provided (or built) enough amphibious ships to transport the marines.
Make no mistake, the “amphib navy” is not the US Navy’s fair-haired child. Spending money on amphibious ships is only done grudgingly.
But in this case, the navy might argue a degree of confusion about what the Marine Corps wanted. A year or two ago it seemed the commandant and the Marines just wanted 30 new light amphibious warships.
The idea was these ships would be used to shuttle marines and supplies to and from their island hideouts in the Western Pacific. There, they would watch for Chinese ships in the event of war.
“Force Design 2030” — the Commandant’s plan to remake the Marine Corps — was the primary focus.
And, anyway, amphibious assault wasn’t something Marines would be doing anymore. It was old-school. And probably not even possible, given today’s persistent surveillance from satellites and drones. Not to mention long-range weaponry.
One knowledgeable observer said it makes sense if you believe in:
General Berger’s strategic vision, [which] is to get out of the business of forcible amphibious landings. “That is sooo WWI …. The PLA have missiles you know…. We now have cyber … did well in defense of Wake Island…. We are NOT another US Army.. America doesn’t need ANOTHER air force in addition to USAF and Naval Air ー too expensive, you know.
Now the commandant is complaining that he hasn’t got enough full-sized “amphibs” to do operations like Turkey and Sudan. No kidding.
One retired Marine put it thusly:
General Berger’s testimony for 30 of those light amphibious warships at US$300 million per copy — which were to flit among the islands but withdraw from the [area of operations] in the event of armed conflict — really shook confidence in his professional military judgment.
In the waning days of his office, for him to now claim, “What I meant to say was I really really need those full-up 31 amphib big decks” just doesn’t resonate.
It almost seems as if the commandant and his advisors had forgotten about the things that a military service has to do in peacetime. You need to be able to do things that you would not or could not do in wartime — but that are essential.
Non-combatant evacuation operations — think Sudan — are a main one. And so are humanitarian assistance and disaster relief — think Turkey. To do these, the MEU/ARG, and enough of them afloat, are a prerequisite. This requires amphibious ships.
The US Navy hasn’t got enough of them, which means the Marines don’t either. And thus the MEU (the marine part of the amphibious task force) was sitting in North Carolina when the nation needed it in the Mediterranean and East Africa.
It’s humiliating.
The Chinese have their own version of MEU/ARGs ready to go and could put together three of them if they wanted. Before long, they will. And the Chinese Navy and Marines will be providing global coverage — along with the prestige and political influence that comes with it. Beijing gets it.
The Marine Corps leadership is going to have to do some clear thinking. That is something already being done farther down the ranks.
And the US Navy needs to clear its head, too. Secretary of the Navy Carlos Del Toro recently said that climate change and diversity, equity, and inclusion (DEI) are the Navy’s top priorities — on a par with warfighting.
Maybe to him. But not to Americans stuck in some place with hopped-up locals with guns and knives running around. Or to Americans caught up in a natural disaster. They just want the Marines to show up.
Now back to General Berger’s mea culpa.
When a Marine Corps second lieutenant screws up, the only answer is, “No excuse, sir.”
He’ll be lucky if he still has a career.
When a 19-year-old lance corporal driving a two-ton truck to a training area turns it over and Marines are injured, he’ll likely be at a court martial and facing jail time.
And when the Marine Corps’ top officer fails at his so-called “Title 10” duties to have the corps ready to respond?
Most marines know the answer to that.
Grant Newsham is a retired US Marine Corps officer and former US diplomat. He is the author of the book When China Attacks: A Warning To America. This article was first published by JAPAN Forward and is republished with permission.
At the annual general meeting of DBS on March 31, chief executive Piyush Gupta expressed regret for the service disruption days earlier, and chairman & nbsp Peter Seah declared that a special board committee had been established to look into the matter with outside experts brought in to assist. TheContinue Reading
Thirty years of being headquartered in London is proving to be very disorienting for HSBC Holdings Plc.
Posterity will question the wisdom of the behemoth’s 1993 decision to move its headquarters from Hong Kong to the UK. Anyone who couldn’t see then that Asia would be the bank’s true profit center decades later — it generated 78% of pre-tax profit in 2022 — wasn’t paying attention.
But today’s tussle between HSBC and Shenzhen-based Ping An Insurance — its biggest shareholder — raises a question everyone knew was coming: whether HSBC is an Asian bank or a global one.
Ping An is pressuring HSBC CEO Noel Quinn to admit it’s the former and create a separately listed Asian business headquartered in Hong Kong.
Michael Huang, CEO of Ping An, says it’s the clearest way to fix what he views as HSBC’s lack of competitiveness. And, as Huang puts it, to “crystallize multiple benefits” from a “strategic restructuring” that better reflects Asia’s contributions to the bank’s bottom line.
Odds are, however, Huang will be disappointed. A shareholders meeting in Birmingham seems likely to side with Quinn, who has time on his side. And a recent dose of healthy financial results is sure to dampen calls for radical change.
Thing is, Huang isn’t exactly wrong. With its 8.3% stake in HSBC, Ping An is well within its rights to agitate for change. There’s certainly an argument that management has “drained HSBC Asia of dividends and growth capital” to smooth out underperformance elsewhere.
Indeed, dramas abroad appear to be preoccupying HSBC’s top management in London. HSBC’s interests in France, for example, have gone awry. Hopes to sell that unit back in 2021 appear to be going nowhere.
Huang probably looks askance at the time and energy spent on the purchase of Silicon Valley Bank’s UK operation in March. Quinn’s team called it a win for HSBC’s global growth strategy. To Huang and his fellow detractors, the SVB deal is yet another distraction from the real game in Asia.
Still, Quinn’s argument to stay the course got a big boost from a barnburner of a first-quarter report.
Earlier this week, shareholders learned HSBC generated a 19.3% annualized return on tangible equity. It was a performance in league with Singapore giant DBS Bank and in a different stratosphere than the single-digit gains normally experienced by HSBC shareholders.
Jefferies analyst Joseph Dickerson notes that the quarter was characterized by “strong capital generation. Revenue showed strength notably in non-interest income.”
Hence Huang’s “timing” problem. Quinn’s team can argue its restructuring strategy is working. Why risk changing course now?
Already, HSBC brass can counter, the bank has pivoted away from low-yielding businesses in Canada and parts of Europe. And that, for all Ping An’s griping, the bank is indeed gravitating more and toward prioritizing Asia.
All this helps explain why advisory group Institutional Shareholder Services wants investors to vote down Ping An’s proposals. ISS told Reuters that Ping An’s strategy “lacks detailed rationale.”
Advisory firm Glass Lewis recommends the same: “We do not believe that realizing improvements in returns and value necessitates a breakup or spinoff of HSBC’s Asian business at this time.”
As Quinn told Bloomberg this week: “We have said all along that we believed the fastest and safest way to get increased valuation, increased profit, increased dividends, is by focusing on the current strategy. These results show that the strategy is working.”
Another reason the time might not be right is the intensifying banking crises that have global markets in near-panic mode. In the US, the collapses of SVB and Signature Bank made headlines anew this week as First Republic Bank hit a wall.
After being seized by regulators, California-based First Republic was sold to JPMorgan Chase. The news triggered investors’ PTSD over UBS having to save Credit Suisse from the financial abyss.
As such, Huang’s odds of convincing other top HSBC shareholders that now is the time for a risky breakup of a US$150 billion lender — one that regulators on a few continents would want to micromanage — are falling by the day.
There’s also the danger of the biggest HSBC shareholder essentially yelling “fire!” in a traumatized financial theater. SVB’s downfall, remember, was precipitated in part by tech billionaires ragging on its management over social media. Many believe, likewise, that intemperate comments from Saudi National Bank pushed Credit Suisse over the edge.
In such a fragile environment, Huang’s Ping An doesn’t seem to be reading the room. There’s no doubt that Chinese leader Xi Jinping would be thrilled to see HSBC heed Huang’s demands. Having a truly pan-Asian giant headquartered in Hong Kong would be a boon for a city watching its banking jobs pivot to Singapore.
Though Huang is speaking for Ping An, this financial cold war of sorts, the extent to which things have broken down entirely between him and HSBC, may fan concerns over China’s increasing hold over Hong Kong and its future status as a global financial center.
It’s intriguing to view this standoff as a microcosm of the East-West divide upending the global economy. More than arguably any other banking giant, HSBC finds itself squeezed between two great powers – China and the US –wielding financial leverage wherever they can find it.
For HSBC, it hardly helps that it relies on the US dollar to clear trades at a moment when Beijing is working to internationalize the yuan. After all, HSBC’s ability to access deals in Hong Kong and China — and rack up massive profits — comes at the pleasure of Xi’s Communist Party.
The outsized role that China’s growth played in the $13.7 billion pre-tax profit HSBC reported in the first quarter makes this a delicate dance.
In February, lawmakers from Britain’s All-Party Parliamentary Group accused HSBC and Standard Chartered Bank of being “complicit” in China’s “gross human rights abuses of Hongkongers.” At issue: barring customers’ access to their pensions after they fled the city amid anti-mainland China protests in recent years.
“These banks cannot continue to act with impunity, and the UK government must act to assist those… who are suffering from the impact of these anti-democratic laws,” says Alistair Carmichael, co-chair of the APPG for Hong Kong.
In a statement, HSBC retorts that the bank has “an enduring commitment to Hong Kong, its people and communities. It is where we were founded nearly 160 years ago. Like all banks, we have to obey the law, and the instructions of the regulators, in every region in which we operate.”
Yet Ping An’s real problem is that it hasn’t pulled enough HSBC shareholders its way. Here, activist shareholder Ken Lui is proving to be an ally.
He recently submitted a resolution calling on HSBC to plot ways to restructure its Asia business. Lui seeks “structural reforms including but not limited to spinning off, strategic reorganization and restructuring” of HSBC’s Asia unit.
Of course, Huang’s company has other options for betting on giant lenders focused specifically on Asia. Selling its HSBC stake is always an option. After all, it hardly seems that Quinn’s inner circle – or that of chairman Mark Tucker – is about to announce a giant U-turn in strategy.
Quinn’s office claims it’s already stress-tested what Ping An is requesting and argues Huang’s ideas would do more to reduce than boost shareholder value. Goldman Sachs has reportedly made similar arguments.
Though Huang is not wrong that HSBC should be more present in Asia, physically, the recalibration he seeks at a moment of fragility in the global banking system seems a non-starter.
Huang might have better luck getting shareholders to prod HSBC to restore dividends. For Quinn’s team, that might be the easier way to defuse this shareholder cold war.
Follow William Pesek on Twitter at @WilliamPesek
Key new technologies sectors that were born in the US are now located abroad. & nbsp,
After 2000, the US trade balance for technology items changed from a deficit to an increasing shortage due to the production migration. Concerns about the US’s reliance on foreign sources for corporate products have been raised due to both a significant trade deficit and the risk to national security. & nbsp,
In effect, the US government has provided greater financial support for corporate technical industries, such as the CHIPS and Science Act of 2022, which pledges US$ 52.7 billion to support the domestic semiconductor manufacturing sector. & nbsp,
Although it is too early to evaluate its effectiveness, there have been earlier initiatives to support strategic different sectors that have both succeeded and failed. Their teachings ought to be taken away. & nbsp,
The silicon and light industries’ long-term support, which began in the 1970s, was the biggest success. The Defense Advanced Research Projects Agency( DARPA ) of the US Defense Department was then in charge of laying the groundwork for the modern electronic world in chips, lasers, and communications technologies in collaboration with industrial organizations. & nbsp,
However, smaller, more prior initiatives to support new industries, including clean energy, have notable failures. Solar panels were created by numerous startups in the early 2000s using & nbsp, Invented in US.
One of these new businesses, Solyndra & nbsp, built its goods on cutting-edge thin film technology, which was ultimately unworkable for business. It was given a$ 525 million federal loan to help with solar panel production, but it fell short and shut down in 2011.
In the US, solar panels supply is currently very low. The majority of them are produced in China using a silicon technology that is completely different from Solyndra. This industry is worth$ 30 billion annually, with much of it being exported to the US. Rates have drastically decreased as a result, and no American organization can thrive with foreign businesses. & nbsp,
An attempt to manufacture batteries for electric vehicles in the US was another loss. With a novel lithium-ion technology, & nbsp, A123 was born out of the Massachusetts Institute of Technology( MIT ) in the early 2000s and entered the market for rechargeable consumer electronic batteries, which was dominated by Asian producers like LG.
A123, on the other hand, concentrated on large systems, specifically on batteries for electric vehicles( EVs ), which were expected to eventually grow into a sizable market, presuming the availability of useful and reasonably priced rechargeable batteries. & nbsp,
The business entered into supply agreements with EV-focused businesses like General Motors ( GM ), but it continued to concentrate on the materials side of battery technology and delegated system integration to its partners. Because it affected its customers’ EV capabilities, this was a significant strategic mistake.
Tesla, which collaborated with well-known Eastern cell manufacturers’ battery technology, was noticeably absent from its client list. Its proprietary system technology made it possible for it to produce and market early electric vehicles( EVs ). Fisker, a significant A123 business, filed for bankruptcy in the interim, and the business was unable to produce profitable products. & nbsp,
A123 was undoubtedly a clear achievement at first. The business raised almost a billion dollars through an initial public offering( IPO ), including$ 250 million from the US government as part of the Federal Recovery Act of 2009. & nbsp,
Despite investing in high-quality development services, the company continued to lose money on the goods it sold. A123 declared bankruptcy in 2012 after failing to raise enough money to continue operating due to ongoing costs. & nbsp, It was eventually purchased by a significant manufacturer of Chinese automotive parts. & nbsp,
These are all blatant examples of industrial policy intended to support different sectors and all involved public financing supplementing personal funds.
While the other two industries failed, the silicon company’s expansion was a large success. The most gifted individuals in the world were drawn to the semiconductor system. & nbsp,
Its performance was attributable to maintaining lucrative activities in business, education, and research facilities with wise US federal funding, primarily managed through DARPA, to address pressing issues and make the findings widely accessible to spur manufacturing. & nbsp,
Venture capital, public markets, and business funds were drawn to the good opportunities presented by the technology in order to meet capital needs. Good ideas could be turned into fantastic new items with the help of all the necessary components. & nbsp,
The two unsuccessful products had significantly fewer resources. With limited resources, the innumerable companies focused primarily on creating innovative new methods for building solar panels. A complete reworking of the components and techniques to reduce costs through clever vertical integration was ultimately successful in creating China’s low-cost, high-performance solar panels industry.
To design and construct for businesses, billions of dollars were needed. In China, the necessary cash was available. The difference is that this level of industry building was always included in the program here. China’s choice program was extensive and clever after deciding to build the solar panels industry. & nbsp,
The choice in Solyndra, on the other hand, was an innovative strategy that ultimately failed with limited financing. & nbsp,
The power course is subject to the same criticism. A123 was essentially the only company attempting to establish a home EV power supplier in the US. There were no viable businesses to offer options, so it was unclear what techniques or tactics it used to achieve. Additionally, there was no concept development relative to DARPA. & nbsp,
My opinion: Two things are necessary to repeat the success of the transistor company’s development with government support.
The ability to capture and asset the highest levels of technologies and business skill by combining business, academia, and government is the first requirement. Also, don’t overlook the part DARPA played in directing technology progress.
Technologist, engineer, poet, and long-time private equity investor Henry Kressel. & nbsp,
Limiting geographic reach for temperature-sensitive products reduces separation and watts.to increase its support offering and create a software suite with customer analysisThe completion of a US$ 3.8 million( RM17 million ) seed round led by Intudo Ventures, an Indonesian-focused venture capital firm, ASSA, one of Indonesia’s largest logistics groups, and Triputra…Continue Reading
The top United States diplomat to China has asked Beijing to clarify the newly-amended Counterespionage Law, which he says could make illegal some ordinary duties of American business people, academics and journalists in the country.
The standing committee of the National People’s Congress (NPC) on April 26 passed an amendment to strengthen China’s anti-spy law. The amended law will take effect on July 1.
The definition of offenders will be expanded from people who “join or accept tasks from” an espionage organization to those who “take refuge in” it. The coverage will also be widened from “state secrets and intelligence” to “other documents, data, materials and items related to national security and interests.”
“This is a law that could potentially make illegal in China the kind of mundane activities that businesses would have to do,” US Ambassador to China Nicholas Burns said Tuesday during a webinar organized by The Stimson Center, a Washington-based think tank. “We need to know more about it so we are asking questions here in Beijing.”
Burns said American firms have to do due diligence before they can agree to major investment deals, while they also need to have full access to economic data to make projections.
“The law could possibly imperil academic research. Professors and journalists could get caught up on this. But what we know so far is not positive,” he said.
In March, five Chinese staff of the Mintz Group, a US due diligence firm, were arrested in Beijing.
Bain & Company, a Boston-based management consulting company, said last week that Chinese police had questioned its staff in Shanghai and seized some computers and smartphones during an operation three weeks ago.
“We are very concerned about this. We have made our concerns known,” Burns said. “We think American businesses here ought to be free of intimidation from the government. And the rule of law should prevail.” Businesses should not be targeted simply on account of “political differences and competitive differences in the US-China relationship.”
He said the US hopes that American business people, journalists and academics can feel safe when doing their duties in China.
“Companies of all countries are welcome to have economic and trade cooperation in China,” Mao Ning, a spokesperson of the Chinese foreign ministry, had said last Friday. “We are committed to fostering a market-oriented, law-based and world-class business environment. China is a law-based country. All companies in China must operate in accordance with the law.”
Mao said then that she could not comment on the Bain case due to a lack of information.
The Wall Street Journal reported on Sunday that the Chinese authorities have in recent months restricted or outright cut off overseas access to various databases involving corporate-registration information, patents, procurement documents, academic journals and official statistical yearbooks.
The US Chamber of Commerce said in a statement on April 28 that the amendment of China’s anti-spy law is “a matter of serious concern for the investor community and likely is as well for their local business partners in China.”
It said foreign investment will not feel welcomed in an environment where risk cannot be properly assessed and legal uncertainties are on the rise.
“We are closely monitoring the heightened official scrutiny of US professional services and due diligence firms in China,” it said. “The services these firms provide are fundamental to establishing investor confidence in any market, including China.”
Global investors pulled a net US$3.17 billion from Chinese stocks through Hong Kong’s Stock Connect during the five trading days last week, the Wall Street Journal reported on April 28, citing an analysis from Exante Data.
After the then-US House speaker, Nancy Pelosi, defied Beijing’s warning and visited Taiwan last August, the Chinese government cut off all communication channels with the US for several months. The two sides resumed dialogues over Taiwan, Ukraine, climate change and trade matters after US President Joe Biden and Chinese President Xi Jinping met in Bali last November.
However, US-China tensions increased again after a Chinese “spy balloon” appeared in North American airspace in late January. Beijing was also disappointed by falling orders and slowing investments from the West.
In the first quarter, China’s exports to the European Union fell 7.1% year-on-year while exports to the US dropped 17%, according to the dollar-denominated figures released by the General Administration of Customs on April 13. The decline was largely offset by the increase in exports to ASEAN countries, Africa and Russia.
If denominated in US dollars, the year-on-year growth of China’s foreign direct investment (FDI) was only 0.5% in the first quarter, significantly down from 32% in the same period of last year.
The Politburo of the Chinese Communist Party’s Central Committee said China will put attracting foreign investment in a higher priority in order to boost economic growth and domestic demands.
“At present, our country’s economy continues to improve but the endogenous driving force is still not strong enough while domestic demand remains insufficient,” the politburo said in a statement after a meeting chaired by General Secretary Xi Jinping this past Friday. “China’s economic transformation and upgrading is facing new obstacles while the promotion of high-quality development still needs to overcome many difficulties and challenges.”
“Attracting foreign investment should be placed in a more important position, and foreign trade and investment should be stabilized,” it said. “It is necessary to help qualified free trade pilot zones and ports meet the requirements of international high-standard economic and trade rules so that they can carry out reform and opening up.”
The Shanghai government said it will optimize its financial services and encourage foreign investors’s participation in China’s financial markets, which will support the fundraising activities of Chinese technology, trade and shipping firms.
Media reports said last month that Biden will soon sign an executive order that will restrict US companies and private equity and venture capital funds from investing in China’s microchips, artificial intelligence, quantum computing, biotechnology and clean energy projects and firms.
Read: More US firms looking elsewhere: AmCham China
Follow Jeff Pao on Twitter at @jeffpao3
In terms of sustainable development goals (SDG), business and investment have long and difficult journeys ahead. Sobering figures from a draft report published by the United Nations (UN) last month reveal that at the end of 2022, just 12% of the SDGs were on track to meet their 2030 targets.
“It’s time to sound the alarm,” the report warned.
“At the mid-way point on our way to 2030, the SDGs are in deep trouble. A preliminary assessment of the roughly 140 targets with data show only about 12% are on track.”
“Close to half, though showing progress, are moderately or severely off track and some 30% have either seen no movement or have regressed below the 2015 baseline.”
The audience at FinanceAsia’s recent Sustainable Finance Asia Forum on April 18 heard that although there is plenty of road to make up on the journey to net zero, so too is there substantial opportunity.
ESG imperatives are changing the way institutional investors approach decision-making, develop sustainable products and operate within new regulatory frameworks.
While the over-arching message of the forum underlined that sustainable goals and driving yield are not inimical, how exactly institutions approach sustainable finance will shape the future.
The following are FA’s top five takeaways from a forum focussed on these frameworks.
***
1. Creativity is key
While sufficient capital may be out there to bootstrap transitional finance in Asia – a region that is bearing the physical brunt of climate change – getting it where it needs to go in emerging markets (EMs) is not working at the scale and speed necessary to effect change.
Emily Woodland, head of sustainable and transition solutions for APAC at BlackRock, told a forum panel exploring the state of play of Asia’s SDG commitments that, as well as climate and transition risks, investors also face the common-or-garden risks that come from operating in EMs.
“There are the general risks of operating in these markets as well – that’s everything from legal, to political, to regulatory to currency considerations,” she said.
“Where finance can help develop new approaches, is around alleviating risks to attract more private capital into these innovation markets, and this is where elements like blended finance come into play.”
To make emerging market projects bankable, de-risking tools are urgently needed.
“That means guarantees, insurance, first loss arrangements, technical assistance which can help bring these projects from being marginally bankable into the bankable space, offering the opportunity to set up a whole ecosystem in a particular market.”
2. Regulation drives change
As investment in sustainable development goals moves from the fringe to the mainstream, institutions are bringing with them experience and learnings that are accompanied by policy, regulation and clear frameworks from regional governments.
Institutions are being asked to lead mainstream investment in the space as increasingly, investment in ESG becomes a viable funding choice.
“The next phase, which is the forever phase, will be when sustainability becomes mandatory rather than just a choice,” Andrew Pidden, Global head of sustainable investments at DWS Group told the forum.
“In the future, you will not be able to make an investment that has not been subject to due diligence with a view to doing no harm – or at least to doing a lot less harm than it is going to supply.”
“People may think this is never going to happen, but people thought this phase (of ESG investment becoming mainstream) was never going to happen 10 or 15 years ago.”
3. China is an ESG bond behemoth
Make no mistake, China is an ESG debt giant. Assets in China’s ESG funds have doubled since 2021, lifted by Beijing’s growing emphasis on poverty alleviation, renewable power and energy security.
According to Zixiao (Alex) Cui, managing director CCX Green Finance International, in 2022, green bond issuance volume alone totalled about RMB 800 billion ($115.72 billion), marking a 44% increase year-on-year (YoY). In the first quarter of 2023, there were 113 green bond issuances worth almost RMB 20 billion.
“Actually, this number decreased compared to last year because right now in the mainland, the interest rate for lending loans from banks is very low so there’s really not much incentive to issue bonds,” he told the audience during a panel on the latest developments in Chinese ESG bonds and cross-border opportunities.
“But over the long term, I think we are on target to achieve a number no less than last year.”
At the heart of this momentum is China’s increasingly ESG positive regulation.
“Policy making is very critical because in the mainland, we have a top-down governance model mechanism which has proven effective in terms of scaling up the market – especially on the supply side.”
4. Greenwashing depends on your definition
When is greenwashing – the overstating of a company’s or product’s green credentials – technically measurable, and when is it a matter of opinion?
Gabriel Wilson-Otto, head of sustainable investing strategy at Fidelity International, told a panel addressing greenwashing and ESG hypocrisy issues, that these transparency and greenwashing concerns are often problems of definition.
“There is a bit of a disconnect between how these terms are used by different stakeholders in different scenarios,” he says.
On one side, is the argument around whether an organisation is doing what it says it is, which involves questions of transparency and taxonomy.
“In the other camp there’s the question of whether the organisation is doing what’s expected of it. And this is where it can get incredibly vague,” he explained.
Problems arise when interests and values begin to overlap.
“Should you, for instance, be investing in a tobacco company that’s aligned to a good decarbonisation objective? Should you pursue high ESG scores across the entire portfolio?” he queried.
“Depending on where you are in the world, you can get very different expectations from different stakeholders around what the answer to these sub-questions should be.”
5. Climate is overtaking compliance as a risk
While increased ESG regulation means that companies must take compliance more seriously, this is not the only driver. According to Penelope Shen, partner at Stephenson Harwood, there is a growing understanding that climate risks are real.
“The rural economic forum global risk survey shows that the top three risks are all related to financial failure directly attributable to climate risk and bio-diversity loss,” she highlighted during a panel called ‘ESG as a component of investment DNA and beyond?’
“In fact, if you look at the top 10 risks, eight of them are climate related.”
The prominence of climate as a risk factor has consistently ranked top of the survey over the past 10 years, she explained.
“Other more socially related factors such as cost of living and erosion of social cohesion and societal polarisation are also risks that have consistently ranked highly,” she noted.
What’s your view on the outlook for green, social and sustainable debt in 2023? We invite investors and issuers across APAC to have your say in the 6th annual Sustainable Finance Poll by FinanceAsia and ANZ.
¬ Haymarket Media Limited. All rights reserved.
Singapore’s biggest bank DBS Group reported a stronger-than-expected 43 per cent jump in first quarter profit to a new high from a year earlier on a higher net interest margin, sustained business momentum and resilient asset quality. “We delivered a record performance and benefited from safe haven deposit inflows duringContinue Reading
Zubin Rada Krishnan succeeds Salim Dhanani as acting group CEO
BigPay currently has 1.3mil users representing nearly 50% growth YoY
BigPay, a Capital A venture company and fintech in Southeast Asia has announced the appointment of Zubin Rada Krishnan (pic) as acting Group CEO.
Zubin was the Malaysia country head for BigPay the past year and…Continue Reading