Worlds Collide Conference — A Forum Where Finance Meets the Environment

The Worlds Collide Conference — A Forum Where Finance Meets the Environment was staged today with 13 leading international and local experts providing updates on sustainable financing trends. Corporations begin to realize the concept of sustainability — a triple bottom line that balances social, environmental and economic interests. Sustainable development has become part of the profit principle — not something the market is forced to accommodate but a market driver.

“Sustainable financing offers capital to projects and businesses that facilitates the reduction of their environmental and social footprint as well as protecting the environment and enhancing social engagement. It is not just a risk management tool enhancing business to protect their corporate reputation and capital, but also offers an excellent business opportunity for companies to develop innovative financial products and develop new customers.” said Dr Andrew Thomson, Chief Executive Officer of the conference organizer Business Environment Council (BEC).

Officiating at the conference, the keynote speaker Dr Edgar Cheng, Chairman of Council for Sustainable Development and Chairman of The World-Wide Investment Co Ltd. quoted some solid figures to highlight the sustainable trend. “In the United States, as of 2005, there were US$2.29 trillion of ‘socially responsible’ assets, including 200 mutual funds with assets of US$179 billion, up from 55 funds with US$12 billion in assets in 1995. A growing number of investment firms, research groups and service providers provide analysis of environmental, social and governance compliance of listed companies. In Asia and the Pacific, socially responsible assets are growing as well, with US$18 to 20 billion in assets under management out of a global total of US$4.5 trillion.”

“We have reached a tipping point in our awareness of global climate change. This has had major implications as we seek ways to finance the transition to a low carbon economy, whether through renewable energy and carbon trading or through improvements in energy efficiency. It is important to explore ways in which Hong Kong, as China’s international finance center, can play a role in low carbon financing as well as socially responsible investing.” Dr Edgar Cheng continued.

As the second 2007 conference of EnviroSeries hosted by BEC, leading financial and sustainable development experts come together to find solutions that bring social, environmental and financial returns. “Innovative financial instruments, for example Socially Responsible Investment (SRI), have been and are being launched with the aim of contributing to a more sustainable development of our societies,” added Dr Andrew Thomson. “ The conference depicted an overview of the products and services available locally and globally, including the emerging diversified sustainability indices and socially responsible investments, carbon trading and the Asian carbon market, eco-tech investments, and the growing links between the environment, society and the bottom line.”

Mr Pieter Oyens, Head of Fund Linked Derivatives Marketing, ABN AMRO Asia addressed the issue of why sustainability makes economic sense. “ Sustainable investing has become a key theme throughout the world. In the United States, SRI assets have grown faster than the ‘entire range of managed assets’ during the last 10 years. The Kyoto Protocol on Climate Change has brought about a significant shift in environmental consciousness. Financial markets need to come into play to redirect financial investments to market players to where they matter the most. Sustainable investments bring social and environmental benefits, and are increasingly becoming a source of excellent returns that investors cannot afford to ignore.”

Ms Changhua Wu, Greater China Director of The Climate Group from Beijing quoted their sustainable initiatives . "Since late 2005, The Climate Group, the International Emissions Trading Association (IETA) and the World Economic Forum Global Greenhouse Register have been working together to develop the Voluntary Carbon Standard (VCS). The VCS is designed to be a global benchmark standard for project-based voluntary emission reductions that provides a degree of standardization to the voluntary carbon market and creates a credible voluntary emission reduction credit, the VCU. The general theme for this work has not only been to provide a global standard, but also to maintain the technology innovation, low transaction costs, and value for money carbon price that exists in the voluntary market."

International Finance Corporation (IFC), the private sector arm of the World Bank Group promoting open and competitive markets in developing countries, launched the China Utility-Based Energy Efficiency Finance Program (CHUEE) as another solid initiative. “IFC provides up to US$50 million in Risk Sharing Facilities for participating commercial banks in China, supported by a grant of US$16.5 million from Global Environment Facility (GEF) and US$3.0 million from the Finland’s Ministry of Trade and Industry. We develop a portfolio of up to US$115 million in energy efficiency project loans by local financial institutions. We also support significant developmental impact on promoting energy efficiency, reducing pollution and greenhouse gas emissions, as well as promoting SME lending in China.”

Mr Peter Crewe, Chief Executive Officer, American International Assurance Company (Trustee) Limited (AIA) also showcased a concrete example on the products and services in the market - AIA’s Green Fund is the first SRI fund launched in the Hong Kong MPF market to help MPF members pave the way for a healthier and more harmonious retirement.

"It is also a critical time for the Hong Kong Government to drive strongly through clear policy and appropriate measures." Dr Andrew Thomson from BEC added.