This year’s topic of discussion was ‘Sustainable financing: The big shift is visible. The Invest ASEAN panel compresses regional experts having expertise in Sustainable Financing. The conference was addressed by Eugene Wong Weng Soon, CEO of Sustainable Finance Institute Asia Limited.

According to Soon, sustainable financing covers a range of activities, from putting cash into green energy projects to investing in companies that demonstrate social values such as social inclusion or good governance. He said the best example of social values is having more women on their boards.

“Sustainable finance has a key role to play in the world’s transition to net zero by channeling private money into carbon-neutral projects”, says Soon. He said on this forefront European Union Green Deal Investment Plan aims to raise $1.14 trillion to help pay the cost of making Europe net zero climate change emissions by 2050.

“To ensure that sustainable investments deliver on their promises, global accounting body the International Financial Reporting Standards Foundation has just set up the International Sustainability Standards Board to come up with new rules to validate sustainability claims” Soon said.

Referring to a study, Poonsit Wongthawatchai, EVP, ESG Division, Bank of Ayudhya Public Company Limited, said the performance of a range of ESG investments worldwide between 1970 to 2014 found that half of them outperformed the market. Only 11% showed negative performance.

Analysis by BlackRock – the world’s biggest asset management company – found that during the height of the COVID-19 pandemic in 2020, more than eight out of 10 sustainable investment funds performed better than share portfolios not based on ESG criteria.

Wongthawatchai said paying higher dividends to shareholders, companies with high ESG ratings have also enjoyed stronger increases in their share prices in the past five years.

“This matters because most stock market investments are made by financial institutions such as pension funds. In the United States, 80% of listed equity in leading companies is held by organizations that are looking after other people’s money. While individuals may choose to earn a lower rate of return to save the planet, institutional investors and pension fund trustees don’t have that luxury. They must abide by what is known as a fiduciary duty to act in the best financial interest of investors”.

“But rising returns on sustainable assets mean trustees no longer have to sacrifice sustainability for profit”, Wongthawatchai said.

Timothy Tan, Snr Associate, Sustainability & Sustainable Finance, Singapore Exchange Limited said in contrast, sustainable companies are more likely to win contracts, save costs by using fewer resources, have less regulation, retain the best people and avoid losing money on old carbon-intensive processes.

Global companies took in a record $859 billion in sustainable investments in 2021, including $481.8 billion in green bonds that raised money for specific environmental projects. And the level of sustainable finance is only set to grow. The total value of ESG investments is on track to exceed $53 trillion by 2025.

Image credit: www.maybank.com

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Investors who took part in the funding round for Tonik include venture capital firm Insignia Ventures Partners and Credence Partners. Regional angel investors also participated in the funding round.

With regard to the fresh funding round, Greg Krasnov, founder and chief executive at TONIK told the media, “We are honored to have secured the backing of such prominent regional investors as Insignia and Credence. Over 70 percent of the adult population in the Philippines remains unbanked, and market research indicates that over 50 percent of existing bank clients would be keen to switch their deposits to a pure-play digital contender. We look forward to working with our new investors to improve financial inclusion in the country.”

Earlier this year, Tonik Financial announced that its subsidiary Tonik Digital Bank received approval from the Bangko Sentral ng Pilipinas (BSP), to provide digital banking services in the country.

Tonik is expected to go online in the Philippines this year. It claims to be the first fully digital bank in the region and one of the very few globally to be operating on the basis of its own bank licence.

To launch its digital bank in the Philippines, Tonik is partnering with Finastra to use its cloud platform to power its end-to-end core banking capabilities. Global neobanks such as Gravity and Revverbank also use Finastra’s cloud platform.

Traditional banks such as CIMB, ING and MayBank have also launched their own digital banking unit in the Philippines.

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This decision is part of Maybank’s efforts to diversify its revenue stream.

The RSME segment is reported to have a turnover of up to $14.4 million. The segment is very different from commercial banking business comprising companies with a turnover between $14.4 million and $86.3 million.

Marc Leong, head of SME banking at Maybank told Business Times, “We are trying to move more into fee-based income as we realised there’s always asset risk. And SMEs need these services, so why not offer it to them instead of having competitors do it?

The RMSE segment’s clientele has grown up to 70 percent and comprises a fully dedicated  85-member team. Leong has said there will be 100 percent growth in trade finance and treasury services.

Maybank Singapore is in discussion with its Malaysian head office to apply for one of the five digital banking licences in Singapore. The digital wholesale bank licence will allow Maybank to offer financial services to SMEs and other non-retail segments. 

Digital banks target underserved small businesses while traditional banks focus more on well-established SMEs, Leong said. The bank’s non-performing loan ratio for its SME segment is below the industry average of 5.1 percent. 

The bank’s net profit for the second quarter fell by 0.9 percent to RM1.94 billion owing to lower effective tax rate in the previous corresponding year. 

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