ESG: Staying The Course

When it comes to sustainability and impact investing, UBS partners with its clients to find solutions.

With the rise of social and environmental challenges, investors are increasingly in pursuit of solutions that yield both financial returns and positive impacts. As one of the world’s largest managers of private and institutional wealth, UBS is partnering with its clients to facilitate the mobilization of their capital toward a more sustainable world. The bank places a strong emphasis on the huge potential for strategic sustainable and impact investments across the APAC region.

In fact, sustainability has always been at the heart of its business, dating back almost 70 years. Over the course of this journey, UBS has notched several remarkable milestones. These include securing ISO 14001 certification for worldwide environmental management system in 1999, introducing the UBS in society program in 2014 to bolster its focus on sustainable performance, and most recently, its own decarbonization efforts.

The Bank of Choice for the Sustainability-Minded

“We want to be the financial provider of choice for clients who wish to mobilize capital toward the achievement of the 17 Sustainable Development Goals and the orderly transition to a low-carbon economy,” says Tasos Zavitsanakis, Managing Director, Co-Head APAC Sustainable Finance Office of UBS.

The way UBS sets about doing this is through a multi-strand approach that integrates sustainability across its clients’ investment, corporate and philanthropic activities where relevant. The latter is channeled via the UBS Optimus Foundation, an independent foundation linked to the global wealth manager.

The bank is also well-positioned to address the specific challenges facing sustainably aligned investors and clients within the wider Asia region. Detailing both the significance of Asia and its unique characteristics, Alvin Yeo, Executive Director, Head of Green and Sustainable Finance, LDCM Asia at UBS says: “Singapore, Thailand, Philippines and Malaysia are utilizing the capital markets in different ways. This is where you need a level of strategic know-how to facilitate and fund transition initiatives that many clients just don’t have available in-house. Obviously, though, this is something that we can bring to the table.

“The region has huge potential, particularly with regard to energy transition. According to data from the World Economic Forum, 83% of Southeast Asia’s energy is currently derived from fossil fuels. Achieving the region’s 2050 net zero target will require substantial investment.”

Within the region, China is a massive market with very distinct characteristics. Zavitsanakis says, “Through a series of policy decisions, the mainland government has been creating an enabling environment— particularly with regard to renewable energy transition and transportation. As a result, there are some highly appealing investment opportunities available, especially in the fields of energy storage, smart mobility, sustainable fuels and carbon capture. Basically, China is doing a great job of directing resources toward where they are most needed.”

Future-Focused, Transition-Oriented

While both Zavitsanakis and Yeo agree that measuring a firm on its ESG performance is a helpful risk management tool, they also believe that as the sustainability and impact investment field has evolved, the market is now prioritizing more forward-looking metrics to distinguish leaders from laggards. Maintaining that ESG should now be the norm for the management of day-to-day business operations, the two prefer to talk about how they support clients who are increasingly looking to create measurable net positive environmental and social impact through their operations and investments as a more fitting description of their specific area of expertise.

Yeo says, “UBS is trying to help companies move to the next level and we aim to work with companies that are forward-looking and transparent when it comes to their ultimate outcomes. In terms of transition strategies, we focus on those that are measurable and verifiable. Management intention and commitment toward improving sustainability performance is important, too.”

In many ways, the two see their roles as helping their clients get ready to meet the many challenges coming down the line and benefit from the unique opportunities of a low-carbon economy transition. Acknowledging that these challenges and opportunities will take a number of different forms, Zavitsanakis says, “There are changes in technology and legislation, all of which have to be evaluated, managed, implemented and financed.”

On the legislation front, many of the looming changes are geared toward higher levels of transparency due to an increasing number of compulsory disclosures. Incoming requirements from the EU, for instance, will require companies to report the impact of sustainability factors on their business, as well as the impact of their operations on those factors, in particular on the environment and human rights. It is almost inevitable that such disclosures will affect corporate valuations and impact the investor decision-making process.

Meanwhile, in terms of technology, there is a host of green and climate tech innovations set to revolutionize the opportunities on of fer to investors who want to bolster their sustainable portfolios. According to both Zavitsanakis and Yeo, many of these, including new renewable energy management solutions and low-carbon manufacturing materials, are going to have particular applications within Asia and open up whole new impact investment fronts across the region.

“This is very much where we come in,” says Zavitsanakis, “as we have the expertise and resources to help our clients devise holistic business strategies and transition plans that capitalize on these new opportunities, whilst being cognizant of the ever-evolving regulatory landscape and investor preferences.”

In the dynamic landscape of global energy, PETRONAS leads the charge by harnessing cutting-edge technologies.

Leaders of today are learning to be more attuned to how technology can energize their growth strategies and help them accomplish their sustainability initiatives at scale. In pursuit of advancing its sustainability agenda, PETRONAS has continued to reinforce its commitment to contributing toward building a more sustainable future.

By strategically increasing its technology investment by 60% from 2021, PETRONAS has launched numerous projects, generating substantial value exceeding RM10 billion (US$2.1 billion). The company also continues to leverage its diverse arsenal of technological solutions to drive continuous value creation, enhance customer experiences and amplify purposeful impact.

Aadrin Azly, Vice President for PETRONAS Group Technology & Commercialisation, prioritizes understanding the “why” behind technological investments. He highlights a purpose-driven strategy that transcends the conventional role of an energy company.

He says, “Our journey, though ambitious, is navigated with a keen awareness of global complexities. The history of our industry is marked by ever-evolving challenges and volatilities that demand adaptability and strategic agility. We also recognize that technology can address these challenges as well as be a force for good that can drive systemic change, all of which will support PETRONAS’ Net Zero Carbon Emissions 2050 Pathway.”

Scaling Digital for Operational Efficiency

PETRONAS’ transformative journey has resulted in the streamlining of processes and established digital connections across its ecosystem as part of a commitment to continuous improvement.

New technologies and innovations such as generative artificial intelligence (AI) and machine learning (ML) play a pivotal role, helping to propel sustainable growth and tackle intricate data challenges.

PETRONAS is not merely leveraging AI; its objective is to shape and create AI solutions with a customer-first mindset. Using this approach, digital and AI solutions are integrated across various facets of its operations, spanning sustainability, decision-making, workplace safety and talent development.

To boost the adoption of AI, PETRONAS has invested in its very own Enterprise Data Hub to enhance data accessibility and transparency. Within the organization, this has helped to empower employees with faster access to data. PETRONAS has also established an Artificial Intelligence Centre of Excellence for global collaboration and innovation in AI solutions.

Notably, the award-winning solution, STELLAR, developed in 2020, employs an AI-driven model that captures valuable tacit knowledge from experienced operators and engineers to generate actionable insights and enable real-time response for plant operation optimization.

With machine learning models, PETRONAS uses data to generate insights that achieve project excellence at scale and transform operations. Solutions such as ARIES that uses a suite of ML to optimize plant data has helped PETRONAS achieve approximately RM830 million (US$178.3 million) in value creation.

Prioritizing safety, PETRONAS also utilizes AI in its aspiration to achieve zero incidents by using dynamic algorithms to proactively identify potential hazards and predict accidents. Currently, it is piloting AI-powered robots and virtual -based analytics for inspections.

Advancing Technology for Clean Energy Growth

The evolving energy landscape is ripe with opportunities, prompting diversified exploration and new business ventures that align with changing customer preferences. By spearheading the development and commercialization of innovative technology solutions, PETRONAS is establishing a robust competitive advantage. This extends to various pivotal areas, including specialty chemicals, hydrogen, renewable energy, advanced materials, bio-based value chain and circular economy.

“New frontiers of technology open up every day and as the solutions we have currently in development grow to become commercially viable, we remain confident that we are on the right pathway,” Aadrin says. “Nevertheless, innovation is a team sport, so we are actively seeking collaborations with global and local partners.”

Over the next two decades, as outlined in the National Energy Transition Roadmap and Hydrogen Energy Transition Roadmap, Malaysia will focus on driving clean energy through a whole-of-nation approach, focusing on exploring new energy sources, developing future capabilities and shaping market demand. PETRONAS has been a key player contributing to the roadmaps.

Enabling Technology for Purposeful Impact

PETRONAS’ business-driven research and development (R&D) ensures resilience of its energy portfolio by pioneering solutions while fostering strategic alliances with respected academic institutions across the globe.

One field of focus is advanced materials, which involves the study of materials specifically engineered to have new or enhanced properties for superior targeted performance. Advanced materials can be exploited by ways of engineering to suit many applications. Graphene produced from coke is a waste by-product from the refineries, used to produce multi-use solutions such as versatile coating additive that doubles the lifespan of surface coating.

Strategic partnerships on R&D also further escalate adoption and maturity, and mobilize holistic momentum for sustainability. Partnerships with 30 Malaysian universities and 10 foreign institutions enable PETRONAS to further leverage global expertise in developing technological solutions with speed and optimized cost. The collaborations also enhance the synergy between industry and academia in building a sustainable pipeline of educated and skilled talents.

As PETRONAS continues building on its future-forward vision, with an emphasis on technology investments and commercialization, Aadrin believes that staying competitive through innovation requires adopting an experimental mindset while empowering the company’s workforce to be proactive changemakers.

“While technology sparks change, people are an important part of the equation, so it only makes sense to utilize the brightest minds in their fields who have the skills and knowledge to transform ideas into reality,” he says. “I’ll say it loud and proud—our technologists, engineers, scientists and researchers are rockstars who, instead of the lab being their world, have made the world their lab.”

www.petronas.com/sustainability

Decarbonization software leader Univers is helping pave the way toward a greener built environment through its innovative solutions.

Faced with rising global temperatures and increasingly erratic weather patterns, the climate crisis has reached a tipping point. Against this grim backdrop, sustainability and decarbonization have become top priorities for governments and businesses around the world as they seek to transition to a net zero world by 2050.

In Singapore, the government has launched the Green Plan 2030, a national agenda to advance sustainable development and reduce its carbon footprint through a series of ambitious environmental goals. In a similar vein, New York City has implemented Local Law 97, requiring large buildings to meet energy efficiency and greenhouse gas emissions limits as of 2024, a key move in the city’s comprehensive climate action plan.

To realize this net zero ambition, companies should not treat the pursuit of Environmental, Social and Governance (ESG) goals as a checklist to satisfy investors or regulators, but rather as an integral component of corporate responsibility as the climate emergency deepens.

“As this year’s United Nations Climate Change Conference, or COP28, assesses global progress on climate targets, enterprises must recognize the critical role they play in addressing the climate emergency,” says Michael Ding, Global Executive Director of Univers.

However, the journey to a lower carbon future cannot be achieved solely with a shift to renewable energy. Rather, it has to encompass a comprehensive strategy to reduce energy demand through heightened efficiency, which in turn yields financial and environmental dividends, reinforcing the business case for decarbonization.

The built environment sector, in particular, urgently needs innovative solutions to decarbonize, as it is a major contributor to global emissions. According to a report by the United Nations Environment Programme, the global buildings and construction sector is not on track to achieve decarbonization by 2050. Furthermore, the report noted that the gap between the actual climate performance of the sector and the decarbonization pathway is widening.

To help bridge this gap, leading decarbonization software leaders like Singapore-headquartered Univers are supporting industry players on their sustainability journeys. The global technology company offers enterprises, governments and cities comprehensive decarbonization software that helps over 800 customers across 45 countries optimize energy systems and reduce carbon emissions.

With over 220 million devices connected and 600GW of renewable energy under management, Univers’ platform delivers real-time energy data and data-driven carbon monitoring, reporting and abatement, supporting customers’ net zero transition. Reflecting its global reach, the company has 20 offices in the United Kingdom, France, Germany, the Netherlands, Norway, the United States, Malaysia, China and Japan, as well as its headquarters in Singapore.

A Comprehensive System

Univers’ Unified Decarbonization System presents a holistic approach to reducing carbon emissions in the built environment, beginning with a detailed analysis of current resource consumption and carbon emissions. This analysis is powered by IoT (Internet of Things) technology, providing accurate, real-time insights while reducing manual processes.

With this data foundation, the system helps companies set and pursue realistic carbon reduction goals, aligned with the Science Based Targets initiative (SBTi) for credible and achievable targets. Solutions employed to reach these goals include innovative AI-driven optimization of HVAC (heating, ventilation and air-conditioning) systems, a major contributor to energy consumption, by adjusting them hourly for peak efficiency.

For unavoidable emissions, the company offers mechanisms for offsetting, such as carbon credits, managed through its unified platform. This approach ensures that all efforts are transparent and verifiable, which is essential for credible environmental reporting. Furthermore, Univers’ system seamlessly integrates other sustainable solutions, such as renewable energy and electric vehicle charging, creating a sustainable ecosystem that addresses multiple environmental challenges simultaneously.

“The platform serves as a connector, bringing together various sustainable technologies and practices to create a harmonious and efficient system for decarbonization,” says Ding.

Leveraging Partnerships

Univers solutions extend beyond technological innovations to include strategic partnerships with financial institutions, offering companies access to green financing. This critical support empowers businesses to adopt sustainable practices and technologies more feasibly.

“These strategic partnerships alleviate the financial challenges of adopting greener practices, accelerating businesses’ sustainable transformation,” says Ding.

Univers’ approach is holistic, involving a network that spans businesses and policymakers. Recognizing the importance of collective action, it’s clear that meeting global climate goals demands a unified effort from various sectors.

At the forefront of this mission, Univers emphasizes the power of collaboration and unity. By bringing together diverse parties, the focus is on converging efforts toward the ambitious yet crucial goal of limiting global temperature rise. This aligns with key international agreements and reflects Univers’ commitment to a global, cooperative approach in addressing climate change.

While the built environment is a crucial starting point, Univers acknowledges the need for decarbonization efforts to extend to all industries if critical climate goals are to be met. Says Ding: “The time for action is now, and we plan to play an integral role in globalizing net zero partnerships, helping to empower stakeholders to achieve the step changes needed for widescale decarbonization.”

univers.com

With a comprehensive ESG strategy in place, Hong Kong International Airport is well-positioned to weather the storms ahead.

Hong Kong International Airport (HKIA) has made great strides in recent years toward realizing its Environmental, Social and Governance (ESG) ambitions amid the deepening climate crisis. The airport’s achievements in this space have contributed to its remarkable resilience in the face of extreme weather events in recent years.

In particular, Airport Authority Hong Kong (AAHK), the statutory body that oversees HKIA, works closely with the airport community—including organizations such as the Hong Kong Observatory—to strengthen its ability to respond to such weather disruptions.

Beyond such collaborations, HKIA already has in place a range of effective controls to manage the risks associated with extreme weather events such as typhoons. These include manuals and procedures that clearly detail the steps to take when managing typhoon precautions, business continuity and media engagement. For instance, the airport’s Flight Rescheduling Control System plays a crucial role in managing airline schedules during disruptions.

HKIA also boasts a comprehensive emergency response capability that includes a Fault Response Team, a Passenger Care Team and an Airport Emergency Centre (AEC). For example, in the event of flights being rescheduled due to extreme weather, the AEC supports contingency arrangements such as aircraft ground holding, ramp handling of baggage, passenger crowd management, as well as the extension of public transportation service hours between the airport and downtown areas. These resources ensure minimal operational disruption during emergencies.

Meanwhile, HKIA’s seawall and drainage systems, coupled with an uninterruptible power supply and Internet of Things (IoT) sensors for storm surge alerts, form part of an advanced protection system that contributes to the airport’s resilience.

“The limited damage and ability to quickly recover operations following several strong typhoons and other extreme weather events in the past indicate that the airport currently has a high level of resilience and preparedness,” says Peter Lee, General Manager, Sustainability, AAHK.

Prepared for Climate Change

HKIA’s efforts to enhance its resilience to climate change was proven by a study conducted in 2020/2021. Taking into account a range of future climate scenarios, the study confirmed HKIA’s preparedness, particularly in managing risks to critical assets like airfields and terminals, and mapped out a set of actions to enhance the airport’s climate resilience and adaptation capabilities.

To supplement the climate resilience study, the airport conducted an airport-wide drainage review and seawall study to assess flooding risk under multiple climate scenarios, including rising sea levels, storm surges, overtopping waves and extreme rainfall.

The study detailed HKIA’s capabilities in managing flooding risks up to mid-century and operational viability at the end of the century. Furthermore, climate-related considerations have been integrated into the airport’s future infrastructure and building developments.

“By integrating climate-related considerations into the framework of green design and construction, infrastructure developed at HKIA will be both sustainable and resilient, capable of withstanding the challenges of a rapidly evolving climate,” says Lee.

To stay relevant in a fast-changing environment, the Climate Adaptation and Resilience Plan will be reviewed every five years or as part of planned major investments or changes to infrastructure at HKIA.

Offering a Path to Aviation Careers

Beyond environmental concerns, HKIA is also focused on addressing social issues through various initiatives. For instance, it established the Hong Kong International Aviation Academy to offer people from all walks of life an opportunity to work in the aviation sector. Since its establishment in 2016, some 230,000 participants had enrolled in the academy’s courses.

In particular, the academy’s Cadet Training Programme is designed to equip aspiring talents with the skills and opportunities to pursue careers as airline pilots, thus contributing to the industry’s growth. In addition to theoretical knowledge and flying training, the program also partners with local airlines, including Hong Kong Airlines, HK Express and Greater Bay Airlines, to offer preliminary job interviews for students, allowing them to receive conditional job offers even before they complete their training.

AAHK recognizes the importance of building a sustainable talent pipeline for the aviation industry. As such, it continues to inspire and equip individuals to pursue long-term careers with HKIA by providing them with access to quality jobs and high-quality training, while securing the skilled manpower required to deliver AAHK’s strategic goals as HKIA expands and transforms into an Airport City.

World-Class Governance Standards

In terms of corporate governance, AAHK’s commitment to the highest standards of corporate governance is reflected in its voluntary compliance with the Corporate Governance Code issued by the Hong Kong Stock Exchange as far as it is applicable, even though AAHK is not a listed company. AAHK has published its Taskforce on Climate-related Financial Disclosures (TCFD) Statement since 2021, which outlines the strategy and initiatives for managing and reporting climate-related risks and opportunities. AAHK is one of the first airport operators in Asia to publish a TCFD Statement.

AAHK will adhere to corporate disclosure standards of climate and sustainability-related information published by the International Sustainability Standards Board (ISSB) as soon as practicable in accordance to the timetable put forward by relevant regulators. AAHK prioritizes transparency and accountability, regularly disclosing information in compliance with the code.

Reflecting the success of its ESG efforts, AAHK received an ESG rating of 75 out of 100 in Standard & Poor Global Ratings in June 2023, up from its inaugural rating of 74 last year. The rating demonstrates AAHK’s ability to adapt to potential disruptions. In November 2023, AAHK was ranked forth out of 86 evaluated airports in the airport sector and is in the top third percentile globally in terms of ESG performance, according to leading ESG data and research firm Sustainalytics.

“We believe that a sound and effective governance framework is essential to meeting the needs of our stakeholders and ensuring long-term sustainable growth. We strive to achieve this by instilling a culture of accountability, transparency and diversity that permeates all levels of the organization,” says Julian Lee, Executive Director, Finance, AAHK.

HKIA’s strategic initiatives and robust infrastructure developments underscore its commitment to sustainability principles. Under AAHK’s guidance, HKIA stands as a model for other airports and organizations aspiring to achieve superior standards of ESG performance.