15 Investment Opportunity Areas identified, with information on indicative returns
Serves as market intelligence for investors seeking SDG-aligned opportunities
The Ministry of Investment, Trade and Industry (MITI) and the United Nations (UN) in Malaysia has launched an online market intelligence tool called the Malaysia SDG Investor Map to help private investors find investment…Continue Reading
CLLA is a 5 month programme
Applications for this cohort is open until 30 June
Cyberview, the Tech Hub Developer of Cyberjaya, is now accepting applications for its signature Cyberview Living Lab Accelerator (CLLA) programme. Cyberview has spent more than US$1.3 million (RM6 million) on startups for over a decade. To date, it has…Continue Reading
Share research on developments and most recent sustainability practices
Builds on two-decade partnership, embark on path to low carbon economy
Sunway Group and UOB Malaysia have inked a partnership which will see the two companies working together towards their shared mission to achieve net zero carbon emissions by 2050.
The MoU was signed…Continue Reading
SINGAPORE: Singapore downgraded its 2023 trade forecasts on Thursday (May 25) due to “worse-than-expected” performance in the first quarter of the year. Besides the first quarter showing, the forecast was also weighed down by the manufacturing downcycle and lower expected oil prices, said Enterprise Singapore (ESG) in its review. Non-oilContinue Reading
12th installment of awards sees 70% increase in nominations
6 new categories with judging by independent panel from M’sia & abroad
Global Business Services (GBS) Malaysia, a chapter of PIKOM, recently held its annual award ceremony to celebrate companies and individuals that found success using the GBS models.
“Despite the effect of COVID-19 on the…Continue Reading
Still reeling from the effects of last year’s supply chain woes, energy disruptions and geopolitical tensions, financial markets are now also contending with the impact of consecutive interest rate hikes and uncertainty following recent banking turmoil.
While 2023 may not deliver the capital markets rebound we were all hoping for, it is worth pausing to recognise leading financial institutions that have forged through and made waves in these volatile times.
Marked progress and innovation across deals continues to demonstrate regeneration and resilience. After all, the goal posts have not changed: each of Asia’s markets is bound by net zero commitments; and digital transformation continues to drive regulatory discourse and development around emerging sectors and virtual assets. As a result, sustainability and digitisation continue to be underlying themes shaping a new paradigm for deal-making in the region.
The FinanceAsia team invited banks, brokers and ratings agencies to showcase their capabilities to support their clients as they navigated these uncertain economic times. Our awards process celebrates those institutions that showed determination to deliver desirable outcomes, through display of commercial and technical acumen.
This year marks the 27th iteration of our FinanceAsia awards and celebrates activity that has taken place within the past year (2022).
To reflect new trends, this year we introduced an award for Biggest ESG Impact (encompassing all three elements of ESG strategy) and updated our D&I award to include equity: Most Progressive DEI Strategy.
Read on for details of the winners for Southeast Asia. Full write-ups explaining the rationale behind winner selection will be published in the summer edition of the FinanceAsia magazine, with subsequent syndication online.
Congratulations to all of our winners!
*** SOUTHEAST ASIA ***
CLM (CAMBODIA, LAOS, MYANMAR)
Domestic
Best Bank: Cambodian Public Bank
***
INDONESIA
Domestic
Best Bank: PT Bank Central Asia
Best Broker: PT Mirae Asset Sekuritas
Best DCM House: PT Mandiri Sekuritas
Best ECM House: PT Mandiri Sekuritas
Best ESG Impact: PT Bank Mandiri
Best Investment Bank: PT Mandiri Sekuritas
Best Sustainable Bank: PT Bank Mandiri
Most Innovative Use of Technology: PT Bank Mandiri
Most Progressive DEI: PT Bank Rakyat Indonesia
International
Best Bank: BNP Paribas
Best Investment Bank: BNP Paribas
Best Sustainable Bank: MUFG
***
MALAYSIA
Domestic
Best Bank: Public Bank Berhad
Best DCM House:
Winner: CIMB Investment Bank
Finalist: Maybank Investment Bank
Best ECM House: Maybank Investment Bank
Best ESG Impact: Public Bank Berhad
Best Investment Bank:
Winner: Maybank Investment Bank
Finalist: CIMB Investment Bank
Best Sustainable Bank:
Winner: Public Bank Berhad
Finalist: Maybank Investment Bank
Most Progressive DEI: CIMB Bank
International
Best Bank: Citi
***
PHILIPPINES
Domestic
Best Bank: BDO Unibank
Best DCM House:
Winner: BPI Capital Corporation
Finalist: China Bank Capital
Best ECM House:
Winner: First Metro Investment
Finalist: China Bank Capital
Best ESG Impact: Bank of the Philippines Islands
Best Investment Bank:
Winner: First Metro Investment Corporation
Finalist: SB Capital Investment Corporation
Best Sustainable Bank: Bank of the Philippine Islands
International
Best Bank: HSBC
Most Progressive DEI: Citi
***
SINGAPORE
Domestic
Best Bank: DBS Bank
Best Broker: CGS-CIMB Securities
Best DCM House: United Overseas Bank
Best ESG Impact: DBS Bank
Best Investment Bank: DBS Bank
Best Sustainable Bank: DBS Bank
Most Innovative Use of Technology: DBS Bank
International
Best Bank: Citi
Best Investment Bank: Citi
Best Sustainable Bank: MUFG
Most Progressive DEI: Citi
***
THAILAND
Domestic
Best Broker: InnovestX Securities Co., Ltd.
Best ECM House: Kiatnakin Phatra Securities PCL
Best DCM House: Kasikornbank
Best Investment Bank: Kiatnakin Phatra Securities PCL
Best Sustainable Bank: Bangkok Bank PCL
Most Innovative Use of Technology: InnovestX Securities Co., Ltd
International
Best Bank: HSBC
Best Investment Bank: Citi
Best Sustainable Bank: MUFG
Most Progressive DEI: Citi
***
VIETNAM
Domestic
Best Bank: Techcombank
Best Broker: SSI Securities Corporation
Best Investment Bank:
Winner: Viet Capital Securities Corporation
Finalist: SSI Securities Corporation
Best DCM House: SSI Securities Corporation
Best ECM House:
Winner: Viet Capital Securities JSC
Finalist: SSI Securities Corporation
Best ESG Impact: Saigon-Hanoi Commercial Bank
Most Innovative Use of Technology: TechcomSecurities
International
Best Bank: HSBC
Best ESG Impact: HSBC
Best Investment Bank: HSBC
Best Sustainable Bank: Citi
Most Innovative Use of Technology: HSBC
***
For other winners:
Click here to see the winners across North Asia.
Click here to see the winners across South Asia.
¬ Haymarket Media Limited. All rights reserved.
The Nobel Sustainability Trust will inaugurate the World Sustainability Standards Organization in October 2023, in partnership with numerous governments and international organizations, NST Chairman Peter Nobel announced May 12. The announcement was made simultaneously in New York and Zürich, where the WSSO will be headquartered.
WSSO’s mission, Mr. Nobel said, is to unify standards in sustainable development fields such as energy, carbon credit, green finance, the environmental industry, energy conservation, carbon neutrality-related technologies, and ESG (environmental, social and governmental) investing.
In addition, WSSO will support the roll-out of the carbon market and other projects outlined in the Paris Agreement. It will seek to strengthen international coordination of carbon payment and settlement by integrating the central bank digital currencies of different countries. WSSO aims to promote global convergence of standards, help form a cross-regional common carbon market, and coordinate the use of CBDCs for carbon settlement and other mechanisms for global collaboration.
WSSO will establish research centers and various professional committees in Zurich, Beijing, and New York. In the future, it will open standard certification centers in multiple regions and countries around the world, supporting the synchronization of national and regional standards and reducing geographical, economic, and technical barriers to international cooperation in sustainable development.
The announcement said that the organization believes that “the goals, principles, policies, measures, and institutional arrangements of existing global climate treaties, such as the Kyoto Protocol and the Paris Agreement, are based on scientific research and understanding of historical responsibilities” Noting that “these agreements were formed after long-term and arduous negotiations,’” it says that they “evince deep respect for history and advance the shared goal of sustainable development.”
Within this framework, the organization will encourage each country to “take constructive and transparent actions and cooperate in solidarity,” the announcement says. “WSSO’s purpose is to strengthen the principles and provisions of existing conventions and agreements. The existing institutional arrangements are beneficial to developing countries and provide channels for developed countries to help developing countries achieve carbon neutrality.”
WSSO’s priority is “to establish a global carbon market mechanism, the announcement says. “The carbon market mechanism was stipulated in Article 6 of the Paris Agreement and should be implemented swiftly and conscientiously. The EU’s carbon border adjustment mechanism tax is unilateral, so a global carbon market should be established in accordance with Article 6 to hedge this unilateral measure.”
As for how the carbon footprint of products should be measured in the spirit of the Paris Agreement, the announcement says: “WSSO believes that technical standards and models need to be researched and advanced by the various standard-setting organizations worldwide, and a consensus needs to be reached through thorough negotiation and then embodied in a generally accepted algorithm for carbon conversion.”
WSSO will appoint three representatives, one each from China, the United States, and the European Union, to manage the daily work of its executive committee, under the secretariat system of responsibility. The first head of the secretariat will be Bruno Wu, PhD, one of the first recipients of the Nobel sustainability award medal.
First Republic Bank became the second-biggest bank failure in US history after the lender was seized by the Federal Deposit Insurance Corp. and sold to JPMorgan Chase on May 1, 2023. First Republic is the latest victim of the panic that has roiled small and midsize banks since the failure of Silicon Valley Bank in March 2023.
The collapse of SVB and now First Republic underscores how the impact of risky decisions at one bank can quickly spread into the broader financial system. It should also provide the impetus for policymakers and regulators to address a systemic problem that has plagued the banking industry from the savings and loan crisis of the 1980s to the financial crisis of 2008 to the recent turmoil following SVB’s demise: incentive structures that encourage excessive risk-taking.
The Federal Reserve’s top regulator seems to agree. On April 28, the central bank’s vice chair for supervision delivered a stinging report on the collapse of Silicon Valley Bank, blaming its failures on its weak risk management, as well as supervisory missteps.
We are professors of economics who study and teach the history of financial crises. In each of the financial upheavals since the 1980s, the common denominator was risk. Banks provided incentives that encouraged executives to take big risks to boost profits, with few consequences if their bets turned bad. In other words, all carrot and no stick.
One question we are grappling with now is what can be done to keep history from repeating itself and threatening the banking system, economy and jobs of everyday people.
The precursor to the banking crises of the 21st century was the savings and loan crisis of the 1980s.
The so-called S&L crisis, like the collapse of SVB, began in a rapidly changing interest rate environment. Savings and loan banks, also known as thrifts, provided home loans at attractive interest rates.
When the Federal Reserve under Chairman Paul Volcker aggressively raised rates in the late 1970s to fight raging inflation, S&Ls were suddenly earning less on fixed-rate mortgages while having to pay higher interest to attract depositors. At one point, their losses topped US$100 billion.
To help the teetering banks, the federal government deregulated the thrift industry, allowing S&Ls to expand beyond home loans to commercial real estate. S&L executives were often paid based on the size of their institutions’ assets, and they aggressively lent to commercial real estate projects, taking on riskier loans to grow their loan portfolios quickly.
In the late 1980s, the commercial real estate boom turned bust. S&Ls, burdened by bad loans, failed in droves, requiring the federal government take over banks and delinquent commercial properties and sell the assets to recover money paid to insured depositors. Ultimately, the bailout cost taxpayers more than $100 billion.
The 2008 crisis is another obvious example of incentive structures that encourage risky strategies.
At all levels of mortgage financing – from Main Street lenders to Wall Street investment firms – executives prospered by taking excessive risks and passing them to someone else. Lenders passed mortgages made to people who could not afford them onto Wall Street firms, which in turn bundled those into securities to sell to investors. It all came crashing down when the housing bubble burst, followed by a wave of foreclosures.
Incentives rewarded short-term performance, and executives responded by taking bigger risks for immediate gains. At the Wall Street investment banks Bear Stearns and Lehman Brothers, profits grew as the firms bundled increasingly risky loans into mortgage-backed securities to sell, buy and hold.
As foreclosures spread, the value of these securities plummeted, and Bear Stearns collapsed in early 2008, providing the spark of the financial crisis. Lehman failed in September of that year, paralyzing the global financial system and plunging the U.S. economy into the worst recession since the Great Depression.
Executives at the banks, however, had already cashed in, and none were held accountable. Researchers at Harvard University estimated that top executive teams at Bear Stearns and Lehman pocketed a combined $2.4 billion in cash bonuses and stock sales from 2000 to 2008.
That brings us back to Silicon Valley Bank.
Executives tied up the bank’s assets in long-term Treasury and mortgage-backed securities, failing to protect against rising interest rates that would undermine the value of these assets. The interest rate risk was particularly acute for SVB, since a large share of depositors were startups, whose finances depend on investors’ access to cheap money.
When the Fed began raising interest rates last year, SVB was doubly exposed. As startups’ fundraising slowed, they withdrew money, which required SVB to sell long-term holdings at a loss to cover the withdrawals. When the extent of SVB’s losses became known, depositors lost trust, spurring a run that ended with SVB’s collapse.
For executives, however, there was little downside in discounting or even ignoring the risk of rising rates. The cash bonus of SVB CEO Greg Becker more than doubled to $3 million in 2021 from $1.4 million in 2017, lifting his total earnings to $10 million, up 60% from four years earlier. Becker also sold nearly $30 million in stock over the past two years, including some $3.6 million in the days leading up to his bank’s failure.
The impact of the failure was not contained to SVB. Share prices of many midsize banks tumbled. Another American bank, Signature, collapsed days after SVB did.
First Republic survived the initial panic in March after it was rescued by a consortium of major banks led by JPMorgan Chase, but the damage was already done. First Republic recently reported that depositors withdrew more than $100 billion in the six weeks following SVB’s collapse, and on May 1, the FDIC seized control of the bank and engineered a sale to JPMorgan Chase.
The crisis isn’t over yet. Banks had over $620 billion in unrealized losses at the end of 2022, largely due to rapidly rising interest rates.
So, what’s to be done?
We believe the bipartisan bill recently filed in Congress, the Failed Bank Executives Clawback, would be a good start. In the event of a bank failure, the legislation would empower regulators to claw back compensation received by bank executives in the five-year period preceding the failure.
Clawbacks, however, kick in only after the fact. To prevent risky behavior, regulators could require executive compensation to prioritize long-term performance over short-term gains. And new rules could restrict the ability of bank executives to take the money and run, including requiring executives to hold substantial portions of their stock and options until they retire.
The Fed’s new report on what led to SVB’s failure points in this direction. The 102-page report recommends new limits on executive compensation, saying leaders “were not compensated to manage the bank’s risk,” as well as stronger stress-testing and higher liquidity requirements.
It comes down to this: Financial crises are less likely to happen if banks and bank executives consider the interest of the entire banking system, not just themselves, their institutions and shareholders.
Alexandra Digby is Adjunct Assistant professor of Economics, University of Rochester; Dollie Davis is Associate Dean of Faculty, Minerva University, and Robson Hiroshi Hatsukami Morgan is Assistant Professor of Social Sciences, Minerva University
This article is republished from The Conversation under a Creative Commons license. Read the original article.
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.