April was another busy month for our editorial team, as we spoke to a wide range of asset owners.
Climate change, sustainability were big themes for us during the month as sovereign wealth funds to family offices emphasised the importance of tackling climate change and investing in sustainable infrastructure.
Equally, we also some large asset owners sound caution about the hype around ESG topics and the perils of greenwashing -- a term used to describe false or misleading claims by companies about the positive impact they are making with their actions.
So for April, our specially curated best interviews feature ESG prominently and read what's trending in the world of sustainability.
The sovereign wealth fund of the United Arab Emirates (UAE), Abu Dhabi Investment Authority (ADIA), is seeing strong potential in India's renewable energy sector as the South Asian country seeks to power economic growth.
“ADIA will continue to invest in Indian renewables as the country's electricity demand is likely to grow more than in any other major economy in the coming decades,” Karim Mourad, global head of infrastructure, at the sovereign wealth fund told AsianInvestor.
Despite a challenging global environment, India remains one of the fastest-growing economies in the world, supported by a relatively stable macroeconomic environment. Financial experts agree that India’s economy is in the early stages of a cyclical upswing.
There is a massive pool of opportunities in tackling climate change waiting for investors wishing to make a real-world impact with their money, according to a senior executive at a single family office based in Singapore.
“We believe the next big thing is trying to mitigate climate change, and if that is the case, there will be about $150 trillion of investment opportunities over the next few decades,” Thomas Riber Knudsen, director at the Rumah Group, told AsianInvestor.
Knudsen also manages the philanthropic arm, Rumah Foundation, where he leads the family’s investment portfolio, which includes traditional equity and impact investments.
“Global businesses are now acknowledging that climate change is causing problems for them. And they want to de-risk the business.”
Caisse de dépôt et placement du Québec (CDPQ) has been making a deliberate push to grow its C$402 billion ($300 billion) portfolio in key sectors such as digital and sustainable infrastructure, mobility, and energy transition across Asia Pacific — and India is a large part of that strategy.
“India remains a strategic market for CDPQ because of the region’s potential for long-term growth driven by favourable demographics, a rising middle class, and strong entrepreneurial culture,” Saurabh Agarwal, managing director for Infrastructure in South Asia at CDPQ India, told AsianInvestor.
South Korea’s Public Officials Benefit Association (POBA) is putting much effort into incorporating environmental, social and governance (ESG) factors in its investment decisions, but the pension fund is struggling to establish objective guidelines and measuring tools to track the impact of that effort.
According to Huh Jang, POBA's chief investment officer, the implementation of ESG in decision-making has been a topic of much debate among asset owners from varying perspectives.
“The correlation between ESG and investment returns is not entirely clear and requires further study,” Huh told AsianInvestor.
The principal director for responsible investments at PGGM Investments, the investment manager for the €277 billion ($306 billion) Dutch pension fund, has pointed to the continued challenges associated with measuring the social impact of investments, highlighting the reputational dangers of social greenwashing.
“You encounter liberal definitions. There is some inflation in the terms that we want to be very cautious about. You don’t want to overstate [investors’] social contributions,” said Hans Op’t Veld, principal director for responsible investments at the fund.
The dangers of social greenwashing arise in part because of the challenges of accurately measuring the social impact of an investment, he noted.