From Renewables to Real Estate, Societe Generale is helping Clients across Asia Pacific advance on their Journey to Sustainability
There is no question that 2022 was a challenging year, with geopolitical turmoil, rising inflation and interest rates, slowing economic growth and real concern over energy security and supply chains.
While these issues have, rightly, risen up the agenda for corporations and investors, the race towards net zero has remained at the top of the agenda for those organisations, and is seen as the main long-term driver to build more sustainable and resilient economies.
At Societe Generale, we have put sustainability at the center of our strategy and in 2022 we continued to finance and advise on a number of positive impact projects across the Asia Pacific region.
Following the support of multiple solar and wind developments in the region over the past decade, we have been also active in North Asian offshore wind market – where we have been closely involved in many of the early projects since 2018. In fact, Japan’s largest offshore wind and storage project, off the country’s northern island of Hokkaido, achieved its financial close in 3Q 2022.
Another area that is attracting both investments and attention is green hydrogen. While this simplest of elements promises to decarbonise hard-to-abate industrial and transport sectors, investors have to be careful not to succumb to hype: building a fully-fledged hydrogen ecosystem will take time, government incentives and experienced partners.
We see accelerating momentum in India’s energy transition as the government is putting legal and regulatory frameworks into place and the public and private sectors are working together to come up with the billions of dollars that will be required to move this giant country towards net zero emissions by 2070.
China is on the same journey and its low carbon technology is advancing rapidly. As the country is now gradually reopening its borders, this has led multinationals and foreign portfolio investors to question whether China is on a path to a timely and sustained recovery. The answer to this question is a resounding ‘yes’, conclude Societe Generale’s top economists and strategists in the region.
The journey to sustainability is underlined by the practical, bottom-up steps being taken by regulators in these countries to improve the efficiency of capital markets and to promote sustainable investment. More generally, the innovation in Sustainable Bonds across the Asia Pacific region is encouraging.
As one of the continent’s foremost financial centres, Singapore is seeing growing issuance of such bonds. In fact, the city state is functioning as a hub for all of Southeast Asia, as countries and companies there work together to finance the move to cleaner, low-carbon energy.
Financial markets saw the shift in appetite for different sustainable investing products given the recent development and innovation. However, sustainable investments could mean different things to different people. Both corporate and investors should remain rigorous when incorporating ESG considerations in their portfolio management.
As the drive to achieve sustainability spreads to all corners of the financial system, global transaction banking is moving in that direction and playing an important role. By supporting companies that are willing to shift to more sustainable value chains and by fostering the trade in climate-related technologies, trade finance can have an outsized impact in promoting the energy transition. In mainland China and Hong Kong, for example, we see growing demand for sustainable cash management and working capital loans. The country is also using its leadership in digital payments to transform financial infrastructure, starting from cross-border trade and cash management, to prepare for the future of finance.
On the social side, we are proud to have supported a sustainability loan facility for a portfolio of two schools in New Zealand. The projects deliver positive impact through essential services to the community as well as environmental enhancements to the facilities.
Meanwhile, we are also helping clients with shorter-term issues they are wrestling with. Our market specialists are thinking hard about inflation hedges that institutions can use to de-risk their portfolios as monetary policy tightens. And in such an environment, we continue to see opportunities in certain hard asset classes, specifically in Australian commercial real estate and in shipping, allowing us to come up with innovative financing structures for clients.