CESG: For decarbonization, follow the money

Investing momentum continues to move forward for decarbonization efforts, according to panel discussion participants at the 2022 CleanEnviro Summit Singapore (CESG) event. The investment growth rate may be tested by inflation or recession, but the consensus reached at the Paris Accord and subsequent COP meetings was identified as permanent.

Dr. Yasmine Fouad, an Egyptian delegate to the upcoming COP-27 conference on climate change, said the process is moving from the dialog to the implementation stage, requiring the efforts of “all stakeholders, starting with financial institutions. It’s imperative.”

Panelist Pang Yee Ean of Singapore-based Surbana Jurong Capital said such implementation is underway. He said in the previous full nine years, investments tied to corporate environmental, social and governance (ESG) programs rose from $25 billion in 2013 to $1.6 trillion in 2021—increasing by a multiple of 58.

“Money talks,” said Pang. “We need the money to be there before [sustainability-linked] projects can launch,” he continued, adding that rising corporate ESG budgets are “tilting the scale.”

Oliver Tonby of McKinsey said that $1.6 trillion figure has room to grow, saying studies have identified some $6 trillion that can go “into something more sustainable.” Corporations must continue to “shift their investments,” remarked the consultant, since rising carbon dioxide levels continue to yield droughts and the likelihood that more places in the world will become “too hot to work outdoors.”

Decarbonization efforts are tied to materials recycling, a panelist at a later session noted, and also to green building efforts and manufacturing facility proposals, according to Pang and fellow panelist Grace Fu of Singapore’s Ministry of the Environment.

“Investors are being very clear about managing their climate risk,” stated Fu. Added Pang, “If your investment is non-sustainable, you can’t even raise any money. That’s already the case.”

Rajeev Menon of Marriott International said that while the hospitality sector was particularly hard hit by the COVID-19 pandemic, “Sustainability is now right back at the center” of the company’s plans and goals. He said it affects “how we build hotels,” such as adhering to the Leadership in Energy and Environmental Design (LEED) scorecard, to procurement to how food waste is handled.

On the materials front, Menon said Marriott has been phasing out its use of small plastic amenities (soap, shampoo and conditioner) bottles in favor of refillable dispensers in its rooms.

Looking at the blend of positives and negatives, Tonby said because of the amount of carbon dioxide already in the atmosphere, conditions “will get worse” for some people. More encouraging, he said, is that as emissions-reduction investments reach the trillions of dollars, “We can move the needle more rapidly than we have.” The majority of companies, he said, are not playing defense but “are on the offense” seeking opportunities to invest in sustainability.

CESG 2022 was held in mid-April at the Marina Bay Sands Singapore Convention Centre.