New platform aims to spur Asian firms to go green

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 yesterday, 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.

The target companies include those in Asia using and producing fossil fuels, 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 tools to progressively shift the strategic thinking 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 set 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.

The platform can also engage financial regulators to strengthen disclosure and risk management regulation.

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.

Aviva Investors global head of ESG investments, Mr Mirza Baig, 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 added.

"There is a huge opportunity for Asian companies to take the lead in tackling the climate emergency."

Mr Doug McMurdo, chair of the Local Authority Pension Fund Forum, 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.