Investors handling $5.4 trillion throw weight behind new platform pushing for green change in Asia

A 2017 file photo showing an oil refinery on Pulau Bukom.
A 2017 file photo showing an oil refinery on Pulau Bukom.PHOTO: ST FILE

SINGAPORE - Six leading institutional investors have joined forces to spur Asian banks and energy companies to accelerate their decarbonisation transition.

These founding members of Asia Transition Platform (ATP), which was launched on Wednesday (Sept 29), are throwing the weight of their collective US$4 trillion (S$5.4 trillion) of assets under advice or management to drive change.

The platform is coordinated by Singapore-based firm Asia Research & Engagement, which provides expertise in sustainable development and change and will engage with target organisations on the investors' behalf.

These include companies in Asia using and producing fossil fuel, as well as financial institutions, financial regulators and energy regulators.

"Accelerating energy transition in Asia is critical to addressing the climate crisis, yet there is a gap between global investors who want to drive change, and the companies in Asia vital to making it happen," said Asia Research & Engagement founder and managing director Ben McCarron.

Aiming to bridge this gap, ATP will, in its first three years, engage with at least 50 Asian companies across the region's leading financial markets, the firm said.

The initial focus will be on carbon risk and coal at financial institutions and coal-exposed power companies, including those in China such as electricity generation firms Huaneng and Huadian.

It also intends to employ environmental stewardship tools to progressively shift the strategic thinking and governance of the companies that it engages with.

Part of this goal is to promote concrete action, such as getting Asian power and utility companies to roll out plans to bring their businesses in line with targets set out in the Paris Agreement, an international treaty on climate change.

ATP also aims to get Asian banks to commit to stop financing the most carbon-intensive fossil fuels and halt the financing of fossil fuel expansion and related infrastructure.

The platform can also engage financial regulators to strengthen disclosure and risk management regulation, to enable companies to better address climate change risks and opportunities.

The six founding members of the platform are BMO Global Asset Management (EMEA), Fidelity International, Dutch pension fund PGGM, Britain-based Local Authority Pension Fund Forum, Aviva Investors and Legal & General Investment Management.

The fact that global investors, such as Dutch pension fund manager PGGM, are on board reflects how climate change is an issue that needs to be addressed globally, said Mr Andres van der Linden, adviser for responsible investment at the fund.

Mr Mirza Baig, Aviva Investors global head of ESG investments, said that over the past year, there have been encouraging developments in sustainability-related business practices and policies, such as a raft of net zero announcements.

"However, in reality, there is still a stark mismatch between where we are today and what is required to ensure that the objectives of the Paris Agreement are met," he said.

"There is a huge opportunity for Asian companies to take the lead in tackling the climate emergency. This platform brings together investors dedicated to achieving the breakthroughs required to do so."

Mr Doug McMurdo, chair of the Local Authority Pension Fund Forum, also noted that in major developed equity capital markets, there are usually a number of initiatives that investors can participate in when engaging with companies to drive change.

But in Asia, he said there are far fewer such opportunities, particularly when it comes to financial institutions and power companies in China.

Meanwhile, Ms Nina Roth, BMO Global Asset Management director of responsible investment, pointed to the most recent extreme global weather events, which highlighted how an energy transition in all parts of the world is essential and needs to happen even faster than anticipated.

"Ideally, Asia Transition Platform will help accelerate this change through enhanced engagement with corporates and banks across Asia," she said.