Disclaimer

This is to inform that by clicking on the hyperlink, you will be leaving sc.com/sg and entering a website operated by other parties.

Such links are only provided on our website for the convenience of the Client and Standard Chartered Bank does not control or endorse such websites, and is not responsible for their contents.

The use of such website is also subject to the terms of use and other terms and guidelines, if any, contained within each such website. In the event that any of the terms contained herein conflict with the terms of use or other terms and guidelines contained within any such website, then the terms of use and other terms and guidelines for such website shall prevail.

Thank you for visiting www.sc.com/sg


Proceed

How would you like to apply?

I am NOT an existing Standard Chartered Current/Checking/Savings Account holder

*SingPass holders with a MyInfo profile can use MyInfo to automatically fill up the form. By clicking “Next”, you will be re-directed to the MyInfo portal, which is not owned or controlled by Standard Chartered Bank (Singapore) Limited or any member of the Standard Chartered Group (the “Bank”). The Bank bears no liability or responsibility over your usage of the MyInfo portal.

*Please note that MyInfo is temporarily unavailable at the stipulated downtimes:

Mon, Tues, Thurs, Fri, Sat:  5:00AM to 5:30AM. Wed: 2:00AM to 6:00AM. Sun: 2:00AM to 8:30AM

I am an existing Standard Chartered Current/Checking/Savings Account holder

    How would you like to apply?

    I am NOT an existing Standard Chartered Current/Checking/Savings Account holder

    *SingPass holders with a MyInfo profile can use MyInfo to automatically fill up the form. By clicking “Next”, you will be re-directed to the MyInfo portal, which is not owned or controlled by Standard Chartered Bank (Singapore) Limited or any member of the Standard Chartered Group (the “Bank”). The Bank bears no liability or responsibility over your usage of the MyInfo portal.

    *Please note that MyInfo is temporarily unavailable at the stipulated downtimes:

    Mon, Tues, Thurs, Fri, Sat:  5:00AM to 5:30AM. Wed: 2:00AM to 6:00AM. Sun: 2:00AM to 8:30AM

    I am an existing Standard Chartered Current/Checking/Savings Account holder

      ESG Investing

      Sustainable investing is the “new normal” – here are its four key drivers

      Why investors are paying more attention than ever to companies’ ESG practices

      For as long as anyone can remember, the core purpose of investing has been to intelligently deploy capital in search of positive risk-adjusted returns. Finding the best risk-return trade-off was all that truly mattered.

      This is no longer strictly the case. Today, there is a growing awareness in the investment world of the threats posed by external factors such as climate change. Beyond the environment, the Covid-19 pandemic has also sparked increased scrutiny on social and governance issues. Investors are now paying closer attention to how companies are safeguarding their employees’ welfare and whether they are fulfilling their social responsibilities amid a global crisis.

      All this has accelerated the trend toward sustainable investing, also known as ESG (environmental, social, and governance) investing. ESG investing – a term first coined by the United Nations (UN) Global Compact in a landmark 2004 study called “Who Cares Wins” – has thus seen its popularity swell.

      The sustainable surge

      For instance, by the end of June 2020, assets under management (AUM) by ESG-focused funds breached US$1 trillion for the first time – the result of record inflows during the pandemic.

      Plot, Text, Plan

      This trillion-dollar figure might seem less than impressive when compared against the total global AUM, which ended 2019 at about US$89 trillion. But this figure only measures the AUM of explicit ESG funds. All around the world, institutional investors are increasingly applying ESG criteria to their portfolios – even if they are not referring to themselves as “ESG funds”. For example:

      –   The Monetary Authority of Singapore (MAS) set up a US$2 billion investments programme in late 2019. Its objective is to promote public market investment strategies with a healthy green focus, as well as to better position its own investment portfolio for long-term sustainable returns.

      –   Japan’s Government Pension Investment Fund(GPIF), which has an AUM of over US$1.5 trillion, has enthusiastically embraced ESG. It has announced that no new mandates will be awarded to managers without ESG credentials. In early 2020, it also launched a partnership to promote ESG factors in fixed income investments.

      –   Denmark’s largest pension fund, the PFA, plans to allow members to invest in climate-focused investments that will be carbon neutral within five years. And another of its pension funds, MP Pension, has been progressively divesting “negative ESG” companies from its portfolio. Both these funds have a collective AUM of about US$100 billion.

      –   In September 2019, the UN convened the Net-Zero Asset Owner Alliance – a group of institutional investors who seek to transition their investment portfolios to net-zero greenhouse gases emissions by 2050. The group now boasts 30 members with a combined AUM of about US$5 trillion.

      When these “indirect” ESG assets are included, total ESG AUM is estimated to be closer to US$41 trillion. But what are the fundamental forces driving this trend? We have already touched on some of them above, but let’s take a closer look at the four main drivers behind the rise of sustainable investing.

      Driver #1 – Awareness and expectations

      The first driver is increased awareness and higher expectations. Beyond improved media coverage and scientific communication, formal accords such as the Paris Agreement have solidified the realisation that the only viable future is a sustainable, low-carbon one. The younger generation, especially, understands this. Research has shown that millennials believe more decisive action on climate change is needed – a generational finding that bridges political divides. This has translated into their expectations of the companies they transact with, including asset managers.

      Text, Advertisement, Poster

      The impact of the pandemic on the “haves” and “have-nots” has also put the spotlight on rising inequality – the ‘S’ in ESG. Reducing inequality is a vital part of the UN’s Sustainable Development Goals (SDGs), a set of ambitions it seeks to achieve by 2030. Yet, there is still a persistent funding gap of US$2.5 trillion annually that must be bridged to hit those targets. Institutional investors are increasingly embracing the responsibility they must play in closing that gap – especially given the demand from individual investors.

      Driver #2 – Outperforming returns

      Many people believe that sustainable investing carries with it an element of sacrifice. In other words, lower returns for the greater good. However, the data shows otherwise, and sustainable investing has actually outperformed the wider market.

      During the pandemic-induced market selloff in February and March 2020, companies with high ESG ratings outperformed the benchmark S&P 500. The same trend was also seen in the exchange-traded funds (ETF) sector.

      Plot, Number, Text

      Furthermore, the data shows that this is not a recent phenomenon. Morningstar research has found that, over the past decade, almost 60 percent of sustainable funds outperformed their ‘conventional’ peers. They also had greater survivorship rates: 72 per cent of sustainable funds that were on the market 10 years ago remained open to investors at the end of 2019 versus 46 per cent for ‘traditional’ funds. As evidence of sustainable investing’s performance within traditional investment contexts grows, so will its demand and popularity.

      Driver #3 – Long-term resilience

      2020 has seen the emergence of a new buzzword: resilience. Companies are now increasingly focused on becoming more resilient in order to improve their ability to weather the uncertain conditions of the future.

      That said, companies that scored highly on ESG measures were already more resilient. This should come as no surprise. Simply put, sustainable companies have delivered better performance across areas like culture, supply chain management and customer relations. Furthermore, they are also less likely to be exposed to risks that may be caused by sustainability and governance issues such as scandals. It gives them a greater ability to manoeuvre through uncertain times.

      Future crises will likely stem from ESG issues like climate change. Strengthening sustainability factors will be crucial for building long-term resilience and adeptly navigating the future.

      Awareness and expectations, outperforming returns, and long-term resilience represent the “organic” components spurring the demand for sustainable investing. On the “inorganic” side, we have the final driver – regulations.

      Driver #4 – Regulation

      Sustainability is a key guiding principle in many governments’ post-Covid recovery plans. Even before the pandemic, pressure from the industry regulators was already encouraging companies to become more sustainable.

      In the EU, for example, the Non-Financial Reporting Directive mandates that large EU companies disclose certain ESG factors in their reporting. And the upcoming sustainability-related disclosure regulations will require investment firms to show how they are integrating ESG risks. European regulators are also planning to introduce “climate stress tests” to assess banks’ climate-related exposure and manage the potential economic impact of climate change.

      On the supply chain side, regulations like the California Transparency in Supply Chains Act and the UK’s Modern Slavery Act have served to enforce transparency. The goal is to stamp out exploitation in global supply chains, particularly human trafficking and slavery. Crucially, such regulations place the onus on big corporates to ensure the ethicality of their supply chains. This is forcing a shift in how they operate, as pleading ignorance is no longer an acceptable defence.

      Sustainable investing – just normal

      The powerful drivers behind sustainable investing are only getting stronger. Not only is sustainable investing here to stay, it could eventually be the predominant engine of capitalism. It may be the “new normal” today, but soon just the “normal” of tomorrow.

                               

      This article is written by Fidelity International.

      Disclaimer

      This article is for general information only and it does not constitute an offer, recommendation or solicitation of an offer to enter into any transaction or adopt any hedging, trading or investment strategy, in relation to any securities or other financial instruments, nor does it constitute any prediction of likely future movements in rates or prices or any representation that any such future movements will not exceed those shown in any illustration. This article has not been prepared for any particular person or class of persons and it has been prepared without regard to the specific investment objectives, financial situation or particular needs of any person, and does not constitute and should not be construed as investment advice nor an investment recommendation. Where the article describes any insurance product or service, it also does not constitute an offer, recommendation or solicitation of an offer to buy or sell any insurance product or service, nor is it intended to provide insurance or financial advice. You should seek advice from a licensed or an exempt financial adviser on the suitability of a product for you, taking into account these factors before making a commitment to purchase any product. In the event that you choose not to seek advice from a licensed or an exempt financial adviser, you should carefully consider whether the product is suitable for you.

      Standard Chartered Bank (Singapore) Limited (the “Bank”) will not accept any responsibility or liability of any kind, with respect to the accuracy or completeness of the information herein. The Bank makes no representation or warranty of any kind, express, implied or statutory regarding this article or any information contained or referred to in this article. This article is distributed on the express understanding that, whilst the information in it is believed to be reliable, it has not been independently verified by the Bank.

      The named contributor to the article (the “Contributor”) does not assume any duty to update any opinions or forward-looking statements, which are based on certain assumptions of future events and information available on the date hereof. There can be no assurance that forward-looking statements, if any, will materialise or the intended objectives or targets can be achieved. Whilst great care has been taken to ensure that the information contained herein is accurate and the data or information supplied by outside sources are reliable, the Contributor does not accept any responsibility or liability of any kind, with respect to the accuracy or completeness of the information herein. The distribution/dissemination of this article in certain jurisdictions may be restricted by law. The Contributor shall not be held liable as to how and where the Bank chooses to distribute or disseminate the article, in the event that the Bank acts or omits to act in willful default of the Contributor’s written notice to the Bank regarding such distribution or dissemination. Persons into whose possession this article may come are required to inform themselves of and comply with any relevant restrictions. Receipt of this article does not constitute an offer or solicitation by the Contributor in any jurisdiction in which such an offer is not authorised or to any person to whom it is unlawful to make such an offer or solicitation. The Contributor does not purport that it is duly licensed or registered to offer financial services of any kind in such jurisdictions.