ESG

It is Allianz Real Estate’s view that ESG issues, such as climate change, are increasingly impacting the fundamentals of the real estate markets worldwide. As such, Allianz Real Estate believes that ESG needs to be integrated within its business, from the investment processes through to the way it interacts with tenants.

This document, which is based on the Allianz Real Estate ESG Group Policy, outlines its approach to integrating ESG considerations into the business processes within our investment approach. It applies to all areas of our investment activity – equity and debt, directly held and indirect – and has been adopted by all branches and hubs of Allianz Real Estate around the world. Approved by the Allianz Real Estate Executive Committee, the policy has been developed in conjunction with Allianz Climate Solutions but does not influence the own-use real estate managed by other entities within the Allianz Group. It follows Allianz’s holistic approach to the integration of corporate responsibility and particularly ESG criteria into business, which is recorded in the Allianz Group standards and governance records.

This report was originally published in https://www.allianzrealestate.com/_Resources/Persistent/306c15ef8a33b053fcc309911575501038f06b8c/ARE_ESG_Policy%20May%202021.pdf

Cohen & Steers’ commitment to investment excellence is built upon a culture of continuous improvement, and that includes our approach to ESG integration. They believe their proprietary approach to integration and engagement, combined with the framework established in the Principles for Responsible Investment (PRI), helps to promote transparency and has the potential to enhance their ability to deliver more consistent, attractive risk-adjusted returns.

This report was originally published in https://assets.cohenandsteers.com/assets/content/resources/insight/ESG-Evolving-Landscape_ES2050.pdf

In their Integrated Sustainability Report 2022, CDL talks about their reduction strategies to attain the goal of decarbonising towards net zero, guided by various globally-recognised disclosures such as TCFD, SASB and CDSB. They also share their determination to drive innovation and building performance, and create inclusive business environments and develop sustainable communities.

This report was originally published in https://www.cdlsustainability.com/pdf/CDL_ISR_2022.pdf

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This paper from MSCI examines the challenges presented by both climate change and the net-zero transition to investors looking to measure and manage climate risk in their portfolios. Effective management of climate risk requires a clear understanding of its multifaceted nature.

Broadly speaking, climate risk can be broken down into physical risk and transition risk, and it can impact companies and investors via both microeconomic and macroeconomic transmission channels. The transition to net-zero depends on many factors: policymakers’ decisions, the development and economic feasibility of green technologies, investors’ attitude toward climate risk and net-zero investing and consumers’ sentiment toward low-carbon consumption. This and the long horizon mean that investors face an elevated level of uncertainty when making investment decisions.

One approach is to undertake forward-looking scenario analysis, in which various outcomes for uncertain factors such as policy decisions and the development of green technology can be explored, along with their financial impacts. This is becoming a standard tool for climate risk analysis, supported by major organizations such as TCFD.

In this paper, the MSCI Climate Value-at-Risk (Climate VaR) metric is used to examine climate risk in a set of hypothetical portfolios and explore a few strategies to reduce that climate risk. A second approach could be to incorporate a carbon-emission factor in equity risk models to help quantify the impact of emissions on portfolio returns.

As more investors begin to consider the risk of climate change when making investment decisions, financial markets may see a reallocation of capital from carbon-intensive to carbon-efficient investments — and companies’ emission profiles may emerge as a systematic driver of equity returns. Although climate risk management is not yet widespread among investors or fully standardized by regulation, industry trends are pointing in this direction. Investors may therefore wish to be aware of existing approaches for measuring and managing climate risk. 

This report was originally published in https://www.msci.com/www/research-paper/net-zero-alignment-managing/03147524351

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This paper from MSCI seeks to lay out some fundamental principles and best practices for ESG reporting of short positions at a portfolio level, based on the results from MSCI’s consultation with over 20 market participants globally. It also explores related issues that influenced market participants’ views on this topic, including cost of capital, shareholder ownership, engagement and regulation.

The most important principle for long-short portfolio ESG reporting is transparency. Transparency allows both regulators and clients to more accurately assess the ESG risks and opportunities to which the fund is exposed on both the long and the short sides of the portfolio. The main difference in investor views on reporting short positions was whether the investor was assessing a company’s real-world impact or if they were focused solely on its ESG risk/return metrics.

In general, asset owners, asset managers and hedge funds agree that reporting for ESG transparency is different from reporting for ESG risk exposure, with both being important in meeting different ESG investment reporting objectives. It is therefore recommended that long-short portfolios report ESG and climate metrics separately for both the long and short legs, in addition to any preferred aggregation schemes, as this allows the greatest transparency and flexibility for aggregate portfolio reporting under both a double and financial materiality assessment.

This report was originally published in https://www.msci.com/www/research-paper/esg-reporting-in-long-short/03136460396

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With increasing attention on the effects of climate change, decision-makers are urgently demanding climate-related information. This is reaffirmed by the introduction of mandatory climate reporting by the Singapore Exchange (SGX) and the prioritisation of climate-related disclosures in the International Sustainability Standards Board (ISSB)’s highly anticipated IFRS Sustainability Disclosure Standards proposals, both of which are based on the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD Recommendations). ISSB’s proposals also incorporate industry-based disclosure requirements derived from Sustainability Accounting Standards Board.

This guide seeks to help Singapore-listed companies meet SGX’s requirements for climate reporting. In addition, given the strong signals from key stakeholder groups, even non-listed companies must consider if sufficient climate-related information is available to meet stakeholder expectations, and this guide will be useful for voluntary adoption of the TCFD Recommendations as well.

To provide practical guidance on how to adopt the TCFD Recommendations, the guide features exemplary disclosures sourced from local forerunners and global exponents that illustrate how the various recommended disclosures can be met.

Also covered in the guide are the learning experiences of advanced adopters, with practical considerations gleaned from their experiences and other observations to further smoothen the journey for new adopters.

This guide is developed with the support of SGX, ISCA’s Sustainability and Climate Change Committee (SCCC) and the SCCC Sustainability Excellence Sub-Committee, in support of the Singapore Green Plan 2030.

This guide was first published in https://isca.org.sg/standards-guidance/sustainability-and-climate-change/thought-leadership/isca-climate-disclosure-guide—taking-first-steps-towards-climate-related-disclosures

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Singapore’s carbon tax will be gradually increased from the current SG$5/tonne of carbon emissions up to SG$50-80 in 2030.

The first payments under the newly proposed tax levels will be due in 2025, based on 2024 emissions. Large facilities will be most impacted, but end-energy consumers will also feel the increase.

There are meaningful ways to reduce exposure – both for OPEX (facilities) and end-energy consumers. Facilities should look into driving energy efficiency and carbon efficiency into operations via building controls, fabric improvements, and efficient building services and installations through CAPEX.

Meanwhile, a reduction in end-energy user exposure can be countered by providing subsidies and monetary incentives.

Read the full article at https://www.cushmanwakefield.com/en/singapore/insights/singapore-carbon-tax-2022

Singapore has announced that it is lifting a 2019 moratorium on the construction of new data centres, however government concerns about energy efficiency and consumption mean new facilities will need to meet rigorous standards.

In the short term, the number of new data centres will be very limited, with a maximum of three approvals in a new post-mortarium pilot phase, which begins in the second quarter of this year and which will last 12-18 months. The new data centres will also have a cap on their power use: all must be between 10MW and 30MW.

Jack Harkness, director, industrial & logistics, Asia at Savills, says: “The end of the moratorium and permission for new data centres is good news, as is the focus on sustainability, however with only three approvals in this pilot phase, competition will be fierce.”

The Singapore government imposed a moratorium on construction of new data centres in 2019, due to concerns about the amount of electricity they use. At present, the city-state has 70 data centres with aggregate capacity of 1000MW; the sector uses around 7% of Singapore’s electricity.

However in January, Minister for Trade and Industry Gan Kim Yong said: ““While we continue to welcome data centre investments, we intend to be more selective of which DCs we can accommodate. In particular, we seek to anchor DCs that are best in class in terms of resource efficiency, which can contribute towards Singapore’s economic and strategic objectives.”  An online meeting later outlined the government’s requirements for new centres.

Data centres use electricity to power the servers running inside them and more significantly to keep them cool, as thousands of servers running constantly generates a lot of heat.

The efficiency of data centres can be measured by Power Usage Effectiveness (PUE), a metric which evaluates the energy performance of a facility by calculating the ratio of the energy used as a whole to the energy used by the IT equipment alone. A perfect score would be 1. Singapore will require that new data centres have a PUE of 1.3 or lower. A typical data centre has a PUE of around 1.5-1,7, while the newest data centres in Australia and South Korea, for example, have target PUEs of 1.2-1.4.

Applicants with a track record in building and operating data centres in Singapore will be considered favourably, government officials said. In the longer term, Singapore is determined to remain a data and connectivity hub, they added.

The end of the moratorium is expected to provoke a rush of applications as data centre developers and operators compete to be one of the three approved data centres during the moratorium period. “We expect fierce competition for the limited permissions from developers and operators already present in the market,” says Harkness. “We may also see joint ventures between private equity real estate funds and operators, as we have seen in Australia and South Korea.

“The Singapore data centre market will be entering a new era, where efficiency is crucial. Over the longer term, as newer facilities with lower PUEs come onstream, we may see a flight to quality. This would create opportunities for redeveloping older data centres.”

This article was originally published in https://www.savills.com/prospects/sectors-sustainability-is-paramount-for-singapore-next-gen-data-centres.html

The enhanced principles were based on feedback from industry participants and stressed the importance of stewardship outcomes.

31 March 2022, Singapore – Stewardship Asia Centre (SAC) today released the second edition of the Singapore Stewardship Principles (SSP) for Responsible Investors, updating practices to enhance Singapore’s investment environment. The revisions were driven by a 10-member steering committee, supported by the Monetary Authority of Singapore (MAS) and the Singapore Exchange (SGX).

Singapore first introduced the principles in 2016, outlining practices related to the core behaviour and actions associated with stewardship to promote active and responsible investment.  Since then, capital markets have undergone profound developments as global concerns intensified over the impact of financial investments on the economy, society and the environment. Stakeholders emphasised that investors should become better stewards by demonstrating a genuine intent to deliver sustainable performance and long-term value to clients and beneficiaries, as well as to factor in environmental, social and governance (ESG) considerations. The steering committee took into account the global market developments in shaping the principles. An industry survey was conducted in March 2021 to garner feedback from the asset management industry on their perspective of investment stewardship. This was followed by an open consultation to obtain stakeholders’ feedback on the draft of the updated SSP in November 2021.

“We received feedback from more than 20 stakeholders. These recommendations were taken into consideration to enhance the principles in the areas of internal structures and governance, stewardship beyond listed companies, and ESG considerations. We urge the financial services and investment industry to adopt the updated SSP and make a greater commitment towards responsible investment,” said Rajeev Peshawaria, CEO of SAC.

An as industry-led initiative, compliance to the principles remains voluntary. However, under the enhanced SSP, signatories are strongly encouraged to submit evidence of their stewardship efforts annually to the secretariat of the steering committee.

Abigail Ng, Executive Director and Head of Markets Policy and Infrastructure Department of MAS, said: “MAS is supportive of SAC and the industry’s collective efforts in updating the Singapore Stewardship Principles. Effective stewardship calls for a multi-stakeholder approach by market participants including asset owners, asset managers and service providers. Responsible investment stewardship can help raise corporate governance standards, drive positive change and create sustainable long-term value for all stakeholders – not just for the individual company or investor, but also for the wider economy, environment and society. This is in line with MAS’ efforts to promote sustainable financing in our financial sector. We strongly encourage market participants to become signatories of the SSP and to co-create sustainable business value in an environment of good governance.”

“SGX supports the updated Singapore Stewardship Principles for Responsible Investors. Institutional investors, through their investment strategies, play an important role in the allocation of capital to companies. Institutional investors can shape the practices of their portfolio companies through active stewardship and their investment decisions. This is especially pertinent with the market’s increased focus on ESG considerations and outcomes. With institutional investors engaging actively with companies, I hope SGX-listed companies will be more motivated towards creating and sustaining long term value,” said Tan Boon Gin, CEO of Singapore Exchange Regulation.

Industry participants, including asset managers and asset owners, welcome and support the updated principles.

Amar Gill, Head of Investment Stewardship for APAC, BlackRock, said: “The updated SSP and its enhanced rigour reflecting international developments and local trends in stewardship and corporate governance are welcome steps towards creating a positive investment ecosystem in Singapore. Its guidance will help managers like us and companies themselves protect and advance the economic interests of long-term investors like our clients.”

Sherene Ban, CEO of Singapore and Southeast Asia of J.P. Morgan Asset Management (JPMAM), said: “Active ownership is woven into our active management heritage and we constantly evolve our sustainable investing approach to keep pace with the changing requirements of our clients and regulators. The renewed principles, including monitoring investments regularly, staying active through constructive and purposeful engagement, and taking a collaborative approach in exercising stewardship responsibilities, are in line with JPMAM’s approach to stewardship and engagement.”

Prudential Singapore’s CEO Dennis Tan said: “In the drive for sustainability, every voice matters. We are proud to be an SSP signatory as its principles are aligned with our approach to responsible investment. Through active engagement with companies in our investment portfolio, we aim to achieve our net-zero target by 2050. We look forward to working collectively to further our commitment to creating a stronger, healthier future for all.”

Manish Tibrewal, CEO of Maitri Asset Management, a multi-family office, said: “Given the complexities of managing ESG issues, regular communication and collaboration form a key part of how we engage with our portfolio companies. At Maitri, we constantly align ourselves with industry-leading standards to engage with our portfolio companies. This has enabled us to exchange knowledge and further hone our ESG expertise in a transparent manner so both investor and investee are constantly ahead of the curve when it comes to adapting to the latest ESG trends.”

For more information about the updated principles, also known as SSP 2.0, please click here.

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About Stewardship Asia Centre (SAC) 

SAC is a non-profit organisation established by Temasek, dedicated to helping business and government leaders, investors and individuals activate stewardship practices through research, executive education and engagement. We define stewardship as creating value by integrating the needs of stakeholders, society, future generations and the environment.

Steering Committee of SSP 2.0:

Members

Stewardship Asia Centre (Chair and Secretariat)

Association of Chartered Certified Accountants

Asia Pacific Real Assets Association Ltd.

CFA Society Singapore

CPA Australia

Investment Management Association of Singapore

Institute of Singapore Chartered Accountants                

Securities Investors Association (Singapore)

Singapore Institute of Directors

Singapore Venture Capital and Private Equity Association

Supported by

Monetary Authority of Singapore

Singapore Exchange

SS&C Intralinks’ new report, Gender Diversity and Dealmaking 2022, draws on data from more than 11,000 M&A deals announced between 2010 and 2021 and features commentary from senior dealmakers to understand this trend.

Download the new report to understand:

• Why women CEOs outperformed men during the pandemic on post-deal share price, ROE, EBIT/sales and EBITDA/sales
• How short-term investor reaction to deals announced by female leaders has slightly improved since our first report
• Innovative female CEO M&A strategies and decision-making, such as managing risk by leveraging more advisors and structuring cash-only or all-stock deals
• Significant gender-based differences in acquisition target types and deal processes
• Why the pandemic has improved perceptions of female CEOs and diversity

This report was originally published in https://www3.intralinks.com/gender-diversity-and-dealmaking-2022