When it comes to navigating change, the journey towards sustainability and ESG (environmental, social and corporate governance) can be a challenge.
Instead of facing it on their own, some corporations work together with like-minded partners to leverage mutual strengths towards a common goal.
One such example is the partnership between Standard Chartered and ENGIE South East Asia (ENGIE), working together to tackle the challenges associated with re-engineering businesses and economies in the transition to net zero.
Kai Fehr, Global Head of Trade and Working Capital at Standard Chartered and Jared Chng, Regional CFO at ENGIE South East Asia discuss the challenges, realities, and opportunities in sustainability and ESG.
ENGIE sees its corporate purpose as to accelerate the transition towards carbon neutrality. It does this through helping customers – both businesses and governments - invest in the right systems to reduce energy consumption and maximise energy efficiency, in addition to ensuring its own portfolio is carbon-neutral.
It recognises that different businesses and governments face different challenges - there’s no one-size-fits-all approach. ENGIE’s unique “as a service” approach offers accessibility through integrated, tailor-made, and co-financed solutions.
For instance, Singapore has limitations when it comes to green power. It lacks the wind or geothermal energy that is powering the green revolution in countries such as the UK and Indonesia. Solar is viable, but its footprint is constrained by Singapore’s relatively small physical size.
That means Singapore needs to focus on the biggest opportunity: energy conservation. There is no greener energy than energy that is saved, and ENGIE helps its clients do exactly that. It works on energy efficiency for its clients’ utility systems, often for large industrial concerns, taking on the full asset life-cycle and allowing them to focus on their own core manufacturing process while outsourcing their utilities, long-term and with an energy-efficiency guarantee.
Standard Chartered has many conversations with clients about sustainability. They tend to cohere at the same point: how to bring the physical supply chain in line with the financial supply chain, with sustainability considerations applying to both.
This is another area where the partnership with ENGIE offers a valuable example of best practice. Standard Chartered has partnered with ENGIE to work together on projects through offering the latter sustainable trade finance solutions developed in accordance with the Bank’s Green and Sustainable Product Framework, which sets out eligible qualifying themes and activities mapped against relevant United Nations Sustainable Development Goals. The transparency in this approach is the key ingredient to avoiding grey areas and ambiguities that can lead to awkward questions about “greenwashing”.
A larger question for banks comes in relation to services such as trade financing, where the volume of transactions is very high – Standard Chartered processes several million a year. Hence, defining a framework around sustainable goods, suppliers and end uses is critical to the Bank.
So too is understanding that even with strong sustainability teams internally – it has a dedicated Sustainable Finance team offering expertise in managing ESG risk as well as spotting opportunities and structuring solutions to drive positive impact financing - a bank cannot do everything itself.
Standard Chartered’s approach has been to collaborate with external certifying bodies who specialise in ESG and corporate governance research, such as Sustainalytics, to set out what qualifies as ‘sustainable’ and ‘green’ products. Furthermore, the Bank sets and regularly reviews environmental & social (E&S) standards for clients via a series of public Position Statements which contains the minimum standards and financing criteria covering five sectors that have a high potential environmental or social impact.
With a Framework informed by years of combined experience in sustainable finance and ESG of the Bank and Sustainalytics teams, clients can expect transparency and a strong commitment when working with Standard Chartered on their journey towards sustainability and ESG.
