Episode Transcript
Speaker 0 00:00:00 We're hearing a lot about the new normal. What does the new normal look like, and when will the new normal kick in? Well, let's look at the new normal in context of E S G investing. How can e s g investing, sustainable investing, impact investing, how can that help us get to that new normal? And how can that really help to establish what this new normal looks like? Here to share insights is Helene Lee, co-founder of Go Impact in Hong Kong. Helene, thank you so much for joining us.
Speaker 1 00:00:34 Hey, nice to be here. Thank you for getting me here, Kisa.
Speaker 0 00:00:37 Sure. So could you share with us, first of all, what does the new normal, um, look like, uh, for you? How are things going in Hong Kong? What are you seeing with the, with the investment community there? And then more broadly beyond just what is being discussed in Hong Kong around the new normal, how do you feel that that is relevant in terms of the new normal for global E S G investing?
Speaker 1 00:01:01 Yeah, actually I like the term new normal because you know, by definition it's like, it's not the same old world as we are expecting to go back to, uh, before Corona crisis. And I think that is very true. What we are seeing in Asia is that, uh, the whole shift in terms of both processes and mindset. There are certain things that we might be able to revert back to the familiar world before covid, but there are certain other things that probably will be here to stay such as remote working, such as the pace or the accelerated pace of digital transformation. And I think within that, probably E S G plays a very significant role in terms of filling or bridging some of the gaps that we are seeing. Uh, you know, we talk a little bit about how, uh, the coronavirus actually exposes a lot of the cracks in our systems, whether it be in our values, in our business models, uh, and, uh, in the whole way in which we go about doing business or investing. And more and more people are looking at risk mitigators, and I think through the e s ESG lens investing is a very real risk mitigator, and there could be a whole shift of a mo momentum, um, behind all this.
Speaker 0 00:02:21 So as we move forward, we are talking a lot about how E S G funds could perhaps prove to be more resilient during downturn, but we're not just talking about downturns here, we're talking about a new normal, um, a complete new normal. So in terms of the risk mitigators, could you talk specifically about how the risk mitigation piece will factor into what life looks like post covid?
Speaker 1 00:02:47 Yeah, actually, you know, for investors there's always risk and return. Um, and I think probably what this exposes is that companies that are more resilient are typically companies that do better in terms of environmental, social, or the corporate governance. And all these factors will increasingly come into the forefront, I think both driven by the regulators, uh, as we talk about earlier, but also by the crisis in that these companies probably should be, uh, you know, carrying a, a heavier weight in terms of the over overall portfolio, uh, of the investors. So probably that's the angle where, uh, risk mitigation comes in, uh, and actually be accelerated, uh, through the crisis.
Speaker 0 00:03:34 Let's take a look at how this outbreak and other phenomena is causing global firms to take a look at the interconnectivity of markets. What have we learned, Helene, about the interconnectivity of the markets due to recent events?
Speaker 1 00:03:49 I think we, the coronavirus exposes a few major cracks in our system all over, whether it be in the markets or actually it be in the whole infrastructure and connectivity of our businesses. Um, I think beyond Wall Street, we are also looking at supply chains, uh, being disjointed. If production doesn't step back up, it's gonna affect more than investors. We are looking at, uh, goods not being able to produce and delivered on time. So what that actually exposes, I think is a, a, a very strong wake up call for us to take a probably midterm as well as longer term view of things, uh, which is actually awful difficult for finance industry. Uh, coming from the finance industry myself, we are judged from quarter to quarter. Uh, but I think all of these are very serious breakup calls for us to take a slightly longer term view of how we go about doing our businesses.
Speaker 0 00:04:51 So we, you're talking about wake up calls, which that's a very, um, a great term. I'm looking at the market specifically, and we can look at China, um, and a lot of folks are predicting the optimistic folks are predicting, um, that maybe a v-shaped recovery is expected. What are you seeing on the ground in Hong Kong? Where are you hearing about China as it relates to FinTech or even the broader markets?
Speaker 1 00:05:16 Uh, well actually, you know, it's not all, you know, uh, pessimistic view. I think some factors actually have done better, uh, in the current environment. We have faced with really the largest work from home experiment the world has ever seen. And with that comes a lot of remote, uh, working from remote kind of tools, uh, you know, online tools, whether it be, you know, financial tools or other connectivity, uh, you know, uh, solutions. It really helps, uh, us to, you know, uh, revisit. So, you know, the whole scenario, I think it varies, but enough to say that whether Deliveroo has done more business because people are more confined to eat at home, or some e-learning actually have, uh, uh, you know, a fair much better because, uh, you, we are, you know, sort of like limited, uh, to online learning, uh, I think everybody just, you know, suffers quite a bit from the current situation.
Speaker 0 00:06:19 Yep. So if there are some to prevent future issues, um, from having as much of an impact, obviously there's always gonna be an impact when you have something of this magnitude, but to prevent it from having as much of an impact, what are say the top three questions that leaders should ask themselves now to be ready to respond to these things in the future? You mentioned one great one, which is the work from home theory. Moving forward with that, what are the top, the top three things that leaders should start asking themselves to prepare in advance?
Speaker 1 00:06:50 Um, I think let's not just focus on the coronavirus. Uh, you know, uh, it's definitely something that looms really large right now, but if you look at responsible leadership or sustainable leadership, you are looking at investing in your people, investing into a business model that actually contributes to a long-term success rather than sacrificing the mid-term meets for short-term gains. So all those are different perspectives in which I believe investors, uh, as well as, uh, manufacturers and people in different industry are really looking at, uh, the whole momentum shift towards sustainable finance is very much there. I mean, according to Refin Stater last year in 2019, there's like 20.5 billion net inflows into ESG funds, and I think that is a significant momentum, uh, for the capital markets to reckon with.
Speaker 0 00:07:51 Great. So let's continue that conversation about short-term or either, um, mid-term performance versus long-term performance. If we have leaders who actually have to look at performance numbers, but then need to reconcile that with more long-term impacts in terms of what can promote longevity of the business and what can promote sustainable businesses, what are some of the two or three things that you think leaders should look at or either questions they really need to ask themselves in order to reconcile those short-term performance goals they have to meet on the street versus some of those long-term goals that really have to do with longevity and making a positive social impact?
Speaker 1 00:08:29 I think it's not a trade off. Uh, I don't think we can look at it in a, in a, in a simple way. Like, oh, do I trade off, uh, short-term gains for mid-term benefits? I think it's more, uh, a sense of, you know, the whole value creation, uh, and staying true to your value creation. After all, there won't be any business if we don't have customers and having our customers meet at the forefront. Uh, I think without set compromising on that, uh, it's really at the heart of value creation. It's at the heart of successful business, I think, uh, it's more than just a trade off. It's really staying true, uh, to your value creation process.
Speaker 0 00:09:10 Hmm. In terms of value creation, I like that because it really looks to take the emotion out of it and really focus on how e s G investing, sustainable investing, um, can really benefit in terms of the markets as well. Tell us, Helene, what are you seeing on the ground in Hong Kong that really differentiates the way that Hong Kong is approaching impact investing, sustainable investing versus the rest of the world? What's unique?
Speaker 1 00:09:35 Well, yeah, I, I think it's not just Hong Kong, but more Asia where, you know, where where is our, our home turf here. Um, we, Asia is sort of lagging behind a little bit in terms of adopting, um, sustainable finance. Um, not really for a lack of intention, uh, but I think really a a a kind of lack of actionable, uh, momentum if you like. I think, um, you know, the, the private investors, family offices and so on are always looking out for new product offering, uh, beyond the green bond, uh, beyond, uh, uh, uh, e sg funds. Uh, they're looking at new ways in which sustainable investments, uh, opportunities can factor into the overall portfolio or can be increased in the overall portfolio. And for that to happen, I think there are quite a few gaps that really need to be addressed. Uh, part of which is like an investor education gap. People need to understand exactly what's out there in the invest in the investible universe, and also in terms of the intermediaries, the finance industry, uh, you know, they need to work together with the capital owners, uh, to be really true partners in terms of enabling them, uh, to move their investments towards a more sustainable portfolio as they want to.
Speaker 0 00:10:58 Mm-hmm. <affirmative>. Great. So Halene, let's talk a bit about regulation and some of the regulatory issues that you're seeing going on right now in the Asia region.
Speaker 1 00:11:07 Sure. I think there's not so much issues Kea as there's a huge tailwind from the regulators in Asia at least, uh, that are pushing the sustainable finance agenda forward. So I think that's part of the whole momentum shift that we are seeing in the past couple of years, uh, from the stock exchange that really regulates all the listed companies. Uh, the stock exchange are pushing for more and more disclosure for listed companies around their sustainability reports. So beyond just the annual report, they are now increased pressure on them for quarterly disclosures. And I think that really takes it to a whole new level, uh, of, you know, uh, sustainability, uh, kind of, uh, uh, input from the listed companies. On the other hand, uh, the monetary authorities are also looking at sustainable finance as beyond an alternative agenda. How do the mainstream finance institutions onboard that and embrace that? So, you know, from Singapore to Hong Kong and other monetary authorities, they are really embedding this very much into a whole range of how they look at things. So I think this is also part of the, the pressure, if you like, uh, the tailwind, uh, in which regulators are really pushing the industry forward and also reacting, I think in part to a lot of the demands from capital owners. And in Asia, we see a lot of pent up demands from capital owners for this.
Speaker 0 00:12:36 And so in terms of the response, we hear that the tailwinds are happening, that the regulations are happening. What, um, is the response that you're seeing from industries and corporates? Are they taking it all in stride or are there other types of responses that we're seeing?
Speaker 1 00:12:50 I think they're reacting very positively. I mean, this is not really something, uh, they, they will say no to, but it just means that the bar is being raised, uh, in terms of disclosure, in terms of doing something, uh, increased, uh, robust kind of offering around sustainable finance. The bar is definitely being raised and I think the regulators are, are part of the community, uh, that is working on this.
Speaker 0 00:13:17 Great. Helene, and just to wrap up, if you could point out, um, I use the word, the words, the seed of good that could possibly come from the pandemic as it relates to E S G, as it relates to how investors may be embracing E S G. What positives do you see? What changes do you see coming from this after 2020?
Speaker 1 00:13:42 I think it's a combination of the fear factor as well as, uh, the long term view. So the crisis actually has, you know, put the fear factor right in people's faces and that actually has, you know, the halo people realizing that you need to take a slightly longer term view, uh, in terms of both the way you do business and the way you invest. Probably that would be the seed of good in a nutshell, perhaps.
Speaker 0 00:14:13 Great. Well, Helene Lee, thank you so much for your time, and thank you for your great insight on this. We invite you to subscribe to the Refinitiv Sustainability Perspectives Podcast on iTunes, Spotify, or wherever you stream your content. What did you think about the podcast? Leave us a review on iTunes or follow us on LinkedIn and Twitter for updates on our show. You can even check us out on YouTube now. Thank you for joining. See you next time.
