medium_Deep-waves-Digital-ecosystem.jpg

small_Deep-waves-Digital-ecosystem.jpg

thumbnail_Deep-waves-Digital-ecosystem.jpg

Deep-waves-Digital-ecosystem.jpg

Deep waves Digital ecosystem

large_AdobeStock_221559119.jpeg

medium_AdobeStock_221559119.jpeg

small_AdobeStock_221559119.jpeg

thumbnail_AdobeStock_221559119.jpeg

AdobeStock_221559119.jpeg

![AdobeStock_221559119.jpeg](/uploads/Adobe_Stock_221559119_1041ac32b4.jpeg)




![writer.jpg](/uploads/writer_246719c9d7.jpg)

**Sandy Kaul**
Head of Digital Assets and Industry Advisory Services
Franklin Templeton


## Introduction
I am in the process of completing a three-part series of papers about technology megatrends impacting society and what to expect with the Web3 revolution. This article recaps the innovation cycles that gave rise to these megatrends featured in my first paper—“Evolution of commercial technologies and impact on business delivery.” It also offers a preview of the five megatrends that I will discuss in more detail in my second paper coming out in the first quarter of 2023.


## Tech-driven innovation cycles create new business approaches
Since the 1960s, commercial enterprises have benefited from a rapid evolution in the technol- ogies available to them—adapting many innovations originally designed for the military and previously deployed only to large universities. As these new commercial technologies have emerged, they alter what is possible for businesses and their customers. The push to adopt new capabilities requires enterprises to rebuild their delivery infrastructure. This cycle of new technology changing business abilities, and thus prompting upgrades to an organization’s platform, has now happened three times since the 1960s, and we are on the verge of a fourth innovation cycle.


### Waves of Commercial Technology Innovation
![Waves of Commercial Technology Innovation.png](/uploads/Waves_of_Commercial_Technology_Innovation_82de1f594a.png)

The first cycle, automation, was when computers became more compact, resulting in more efficient business tasks and more centralized data processing. In the 1970s, the second cycle of digitization began with the emergence of personal computers as well as commercial off-the-shelf software. Networking also progressed, with the internet becoming publicly available in the late 1980s and websites exploding by the early 2000s. We are currently finishing up the third cycle, virtualization, that features the introduction of cloud computing, APIs and big data. These new technologies have allowed for the embedding of our social interactions into digital networks and have fostered new commercial platforms that allow individuals and businesses to interact at-will across a range of business activities.

The fourth cycle on the horizon is decentralization, where peer-to-peer interactions shift away from intermediated platforms to commercial protocols where users and resource providers are incentivized to share in the ownership of the networks they use most frequently and participate in the financial rewards those networks generate. For more in-depth information on these four cycles, please explore our recent in-depth report “Evolution of commercial technologies and impact on business delivery.”


## Megatrends being enabled by tech-driven innovation
As these tech innovation cycles unfold, the impacts of continual innovation are becoming more cumulative—resulting in the emergence of five megatrends that reflect broader changes about how society operates. An introduction to these megatrends is provided here, and a more in-depth exploration of these trends and how they are likely to alter society will be forthcoming in our new report due out in first quarter (Q1) 2023.

These megatrends have already profoundly changed the power that individuals wield in society and the value drivers of commerce. The emerging fourth cycle of innovation might witness the culmination of these changes and prove to be the most disruptive yet. Indeed, society may be on the cusp of an even more dramatic evolution than the advent of the internet.

#### Megatrend #1: Democratization of access
The first megatrend relates to how the rails of commerce are becoming increasingly democra- tized. Commerce has become more open, offering individuals and enterprises unprecedented access and control over their buying and selling channels.

•	During the age of automation, proprietary computer systems were built to enhance the efficiency of commerce—increasing the velocity at which transactions could take place and allowing for economies of scale in terms of pricing.

•	The digitization era began to open these proprietary systems, exposing processes and data that had only been available to employees and allowing individuals to access and arrange their own commercial transactions via the web. For example, buying airplane tickets directly instead of using a travel agent.

•	With virtualization, processes have moved beyond the company perimeter and are becoming distributed via platforms and networks that allow individuals and businesses to not only access and initiate transactions, but to contribute and leverage their own resources. For example, allowing others to rent your home on Airbnb.

•	As the decentralization cycle takes hold, these commercial platforms are evolving into commercial protocols. Just as individuals can call up a website using web protocols, such as HTTP, new offerings will allow individuals to access process-focused protocols via the web that allow them to initiate their own contracts, create and collateralize their own assets and earn financial incentives that position them to be owners of the networks they use most frequently.

#### Megatrend #2: Decomposition of business value
The second megatrend shows how the drivers of business value are changing, moving from the in-house manufacture and distribution of tangible goods that can be measured by capital expenditures to a more intangible set of differentiators that increasingly rely on a broader ecosystem to fulfill key processes.

•	Automation placed the focus on enhanced manufacturing abilities, with enterprises able to quantify how much they were investing to improve their throughput and scale.

•	A shift away from tangible to intangible enterprise value began in the digitization cycle as automation shifted from the manufacturing plant to the front office. This allowed for a surge in the creation of innovation and intellectual property—the delivery of which
became a differentiator—thus positioning knowledge-based services as a new value driver.

•	In the current age of virtualization, business value is increasingly tied to powerful platforms that drive network effects. Successful businesses either foster or rely on these network effects by connecting into the ecosystems they enable, allowing the platform provider to fulfill key parts of their business process.

•	As the coming decentralization cycle unfolds, affiliations with a network are likely to evolve with processes from diverse providers becoming embedded into the network, as enter- prises distribute their business value by turning their processes into open-source code that can be accessed by developers and inserted into any relevant transaction flow.

#### Megatrend #3: Expanding power of the crowd
The third megatrend focuses on evolution in the communication channels that individuals utilize to share their experiences around commercial transactions and how use of these channels has given them a voice that allows them to impact, and perhaps ultimately shape, business offerings and messaging.

•	Interactive voice technologies and call centers emerged to support consumers in the automation cycle, allowing them to report feedback and concerns, but in a one-on-one manner that left consumers uncertain about the impact of such engagement.

•	The emergence of bulletin boards, online forums and blogs during the digitization cycle provided consumers asynchronous feedback mechanisms that could be viewed and shared among many potential and actual buyers, as well as viewed by targeted enterprises. This marked the first steps toward the emergence of a crowd voice.

•	Social media—the hallmark of the virtualization cycle—has created a synchronous feed- back loop between consumers and commercial enterprises, elevating in many instances the views and opinions of individuals over the official brand messaging and advertising of the company itself and encouraging the engagement of a new class of influencers to shape opinions.

•	The coming decentralization cycle marks the emergence of a peer-to-peer economy and directly involves consumers via new governance processes that incentivize the most active participants of a network to become owners and a part of the community that sets the business strategy for the commercial protocol.

#### Megatrend #4: Institutionalization of the individual
Institutions use their organizational resources to pursue long-term goals for their underlying members, accessing many financial and social opportunities to achieve their success. The fourth megatrend explores how individuals have been gaining access to these same levers to optimize the use of their personal resources to meet their own long-term goals.

•	The automation cycle supported a massive improvement in record-keeping that allowed for the creation of the credit card that could be issued at scale—allowing individuals to purchase items on credit and extend their buying power, just like institutions.

•	Digitization provided individuals a powerful new tool—the personal computer—and created new channels for individuals via the internet, allowing them to access and engage experts and transact directly with suppliers via their online websites, giving individuals more abilities that were previously reserved solely for institutions.

•	Virtualization has allowed individuals to become part of far-reaching online communities and commercial platforms, which in turn has allowed them to shape their own personal brand via social media, connect to allied networks, and utilize their personal assets to earn revenues—all activities that institutions have traditionally pursued.

•	Decentralization should close any remaining gaps between individuals and institutions as participants in commercial protocols will be able to raise capital directly by issuing NFTs that encapsulate their personal assets and by using their broader set of digital holdings as collateral to borrow against, loan or stake without needing the approval or facilitation of an intermediary.

#### Megatrend #5: Quantification of behavior
The final megatrend explores how each tech-driven innovation cycle has resulted in the creation and storage of a growing set of transactional and process-related data and how the mining of these data have helped to enhance commercial outcomes and become increasingly targeted and personalized.

•	Executive information systems emerged in the automation cycle, pulling together informa- tion from all the various branches and departments of an enterprise to give the C-suite insights into their business activities to enhance their decision-making.

•	Growing use of specialized systems in the digitalization cycle—such as customer relation- ship management, enterprise resource management and point-of-sale transaction processing—allowed information to be gathered at a process level and analyzed to enhance service delivery and improve outcomes.

•	Powerful new data processing techniques and artificial intelligence have been deployed in the virtualization cycle to target how individuals behave at each stage of a process and compare their activity to actions taken by similar cohorts with the goal of tailoring a user’s experience and increasing the likelihood that the user will engage or transact.

•	The decentralization cycle is likely to see algorithms extend beyond how individuals engage in a process to modeling the individual themselves across multiple processes and tying together insights about their activities and behavior to build customized offerings that are based on the individual’s unique profile.


### Impact on society
Collectively, the megatrends previewed in this piece have been gaining ground as each new tech-driven innovation cycle unfolds. The megatrends emerged as the impacts of automation were being fully understood and transitioning to digitization. They became amplified as digitization progressed through the 1980s into the early 2000s and virtualization took hold, and they are likely to find their fulfillment in the coming cycle of decentralization.

If the megatrends progress as we anticipate, in the space of 60 or so years, consumers will have gained tremendous agency and become powerful drivers of commercial activity able to use their resources collectively or as individuals to direct and manage their own lives and livelihoods; while at the same time, commercial enterprises will have shifted from being powerful monoliths that manufactured and distributed their own goods and services

#### Development of Megatrends Across Innovation Cycles
![DEVELO~1.PNG](/uploads/DEVELO_1_4c735087e4.PNG)

to become increasingly enmeshed in a broad networked ecosystem that brings together vast resources and efficiencies in a manner increasingly designed to appeal to the end-user’s experience.

These concepts will be explored in more depth in our upcoming piece due to be released in Q1 2023.





WHAT ARE THE RISKS?
All investments involve risks, including possible loss of principal. The value of investments can go down as well as up, and investors may not get back the full amount invested. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions. Investments in fast-growing industries like the technology sector (which histori- cally has been volatile) could result in increased price fluctuation, especially over the short term, due to the rapid pace of product change and development and changes in government regulation of companies emphasizing scientific or technological advancement or regulatory approval for new drugs and medical instruments. The opinions are intended solely to provide insight into how securities are analyzed. The information pro- vided is not a recommendation or individual investment advice for any particular security, strategy, or investment product and is not an indication of the trading intent of any Franklin Templeton managed portfolio. This is not a complete analysis of every material fact regarding any industry, se- curity or investment and should not be viewed as an investment recommendation. This is intended to provide insight into the portfolio selection and research process. Factual statements are taken from sources considered reliable but have not been independently verified for completeness or accuracy. These opinions may not be relied upon as investment advice or as an offer for any particular security.
Any companies and/or case studies referenced herein are used solely for illustrative purposes; any investment may or may not be currently held by any portfolio advised by Franklin Templeton. The information provided is not a recommendation or individual investment advice for any partic- ular security, strategy, or investment product and is not an indication of the trading intent of any Franklin Templeton managed portfolio.



IMPORTANT LEGAL INFORMATION
This document is for information only and does not constitute investment advice or a recommendation and was prepared without regard to the specific objectives, financial situation or needs of any particular person who may receive it. This document may not be reproduced, distributed or published without prior written permission from Franklin Templeton.
Any research and analysis contained in this document has been procured by Franklin Templeton for its own purposes and may be acted upon in that connection and, as such, is provided to you incidentally. Although information has been obtained from sources that Franklin Templeton believes to be reliable, no guarantee can be given as to its accuracy and such information may be incomplete or condensed and may be subject to change at any time without notice. Any views expressed are the views of the fund manager as of the date of this document and do not
constitute investment advice. The underlying assumptions and these views are subject to change based on market and other conditions and may differ from other portfolio managers or of the firm as a whole.
There is no assurance that any prediction, projection or forecast on the economy, stock market, bond market or the economic trends of the markets will be realized. Franklin Templeton accepts no liability whatsoever for any direct or indirect consequential loss arising from the use of any information, opinion or estimate herein.
The value of investments and the income from them can go down as well as up and you may not get back the full amount that you invested. Past performance is not necessarily indicative nor a guarantee of future performance.
Copyright© 2023 Franklin Templeton. All rights reserved.
Issued by Templeton Asset Management Ltd, Registration Number (UEN) 199205211E.














Evolution & revolution: Five technology mega- trends impacting society

small_LiteracyMonth_20_Buckets 650_Large.png

thumbnail_LiteracyMonth_20_Buckets 650_Large.png

LiteracyMonth_20_Buckets 650_Large.png

![LiteracyMonth_20_Buckets 650_Large.png](/uploads/Literacy_Month_20_Buckets_650_Large_84002786a3.png)

Author: Carole Hodorowicz

It can be a challenge for investors just getting started to learn how to tackle debt, start saving, or find the best ways to pay off loans. Compounded by the coronavirus pandemic, addressing your financial situation can seem even more daunting when trying to learn the basics. 

We surveyed some of Morningstar's[ Generation Z and millennial employees ](https://www.morningstar.ca/ca/news/202904/generation-z-has-the-right-attitude.aspx)to hear their thoughts around money. Here are five lessons they learnt: 


**1. Paying Down Student Loans**

At the start of the pandemic, [the Government announced](lhttps://www.canada.ca/en/services/benefits/education/student-aid/notice-covid-19.html) measures to help students, including payment freezes.

There are pros and cons to continuing payments, and many good ways to make use of the money, like creating or building an emergency fund. If you contributed to your loans anyway, you reduced your principal. Paying down student loans is typically approached in one of two ways: [the snowball method and the avalanche method](https://www.morningstar.ca/ca/news/206124/how-to-paydown-debt.aspx). The snowball method prioritizes paying off the smallest loans first, while the avalanche method focuses on paying off the loan, no matter its size, with the highest interest rate first.

Here's how one employee took advantage of the grace period:

"As the pandemic happened and the government decided to set student loan interest rates to zero, I prioritized paying off as much as I could each month. I felt that I should try to pay the principal down since I will not have any interest eating away at my overall bill."


**2. Tackling Credit Card Debt**

With fewer ways to spend, some may turn their attention to paying down debt.

When approaching any kind of debt, you may be asking yourself the same question: Where do I even begin? Morningstar's director of personal finance Christine Benz recommends taking these steps first:

1) Buy yourself some time. Does your bank offer any options to extend a grace period or reduce your interest rate?

2) Make a list. How much do you owe, who do you owe, how much time you have, and what are the interest rates?

3) Pick a strategy. Do you want to go with the snowball method or the avalanche method

Here's a takeaway from one employee who focused on credit card debt:

"It's given me a new respect for that feeling of 'getting ahead' on payments. It's given me a chance to think more about my long-term savings goals--when I was so caught up in day-to-day spending, I didn't think as much about what I should be saving that money for instead." 


**3. Creating and Maintaining an [Emergency Fund](https://www.morningstar.ca/ca/news/206579/morningstar-money-challenge-day-7.aspx)**

The pandemic helped highlight the need to be financially prepared for the unexpected.

Our investment specialists recommend these tips to get a solid footing in the event of any unforeseen circumstances:

1) Tally up your monthly living expenses, from rent to groceries. Leave out the nonessential purchases.

2) Multiply these costs by three months. This is the minimum amount you should try to squirrel away.

3) See how much you currently have and set a savings goal.

During this time, many readjusted their focus to their emergency funds. Here's what one employee realized during this time:

"I believe that having a more holistic approach to budgeting is essential. Pre-pandemic, I was only focused on one aspect of my financial plan: paying off debt. Since the pandemic, I realized the importance of building up my emergency fund and having a backup plan in case of an unexpected occurrence." 


**4. Increasing Retirement Contributions**

The pandemic pushed some of our colleagues to look long term and consider how to stay on track for their retirement. Another effective use of the extra time and funds on your side is to focus on investing in your retirement plan. The earlier you invest, the more growth potential your retirement account will have.

Here's how one employee's priorities changed:

"After graduating from college during the pandemic, my biggest concern was finding a way to earn money. Now with a job, I am leaning into more savings, including a six-month emergency fund instead of a three-month and reaching my RRSP contribution limit."

It's never too early to plan for retirement.


**5. Cutting Back**

With office closures and stay-at-home mandates, several employees who responded to our survey said they are rethinking their spending habits during the pandemic. 

Here is how an employee embraced Morningstar's mission to think and invest with the long term in mind:

"I have been spending a lot less in areas that I would have normally spent on and putting more in savings. One thing I hope to do is work on finding a better balance between savings and investing and spending while not feeling like it restricts my lifestyle." 


5 Financial Lessons for New Investors

For direct exposure to multidecade and sustainable urban development projects in Asia.

Sustainable Asian Cities Bond Strategy

large_ESGenius_Cementing-a-greener-future-in-China.jpg

medium_ESGenius_Cementing-a-greener-future-in-China.jpg

small_ESGenius_Cementing-a-greener-future-in-China.jpg

thumbnail_ESGenius_Cementing-a-greener-future-in-China.jpg

ESGenius_Cementing-a-greener-future-in-China.jpg

![ESGenius_Cementing-a-greener-future-in-China.jpg](/uploads/ES_Genius_Cementing_a_greener_future_in_China_576dd77aa9.jpg)


Cement is one of the dirtiest industries for greenhouse gas emissions and China pours more than half of the world’s new concrete each year. The sector’s vast carbon footprint means there’s scope for even small adjustments to have an amplified impact in the real world, and we see huge environmental value in helping to set a top Chinese cement producer on a greener path.

By **Alex Dong**, Research Associate <br/>
**Binyu Zhao** <br/>
**Yi Hu**, Investment Writer

Driverless trucks are humming about in this eastern China factory, where high levels of automation, swaths of greenery and a sparsity of workers all ooze with vibes of a tech firm. Yet this is a cement plant owned by Anhui Conch, a top Chinese producer of the building material, which Fidelity International analysts recently visited to carry out research into sustainable investment practices.

Since 2020, we have been engaging with Conch as one of our investees, advising it on how to improve across several environmental, social and governance (ESG) factors. In our most recent dialogue, Fidelity analysts met Anhui Conch CEO Qunfeng Li in Wuhu city in November.

The cement industry is one of the world’s worst polluters. Production of this key ingredient in concrete contributes about 7 per cent of annual global greenhouse gas emissions. China, in turn, pours more concrete each year than the rest of the world combined, with an estimated output of 2.1 billion tonnes of cement in 2022 compared with a global total of 4.1 billion tonnes.

But new innovations in production mean that cement may start to be a bit less polluting - or potentially someday start to bring net environmental benefits. In Europe, new technologies are emerging as scientists seek to revolutionise how concrete is made. Novel processes are being developed that could not only reduce cement’s carbon footprint, but could potentially turn it into a carbon negative material.

In China, cutting emissions in the cement industry is crucial to the national drive towards net zero. Chinese leaders have pledged to hit peak carbon emissions by 2030 and to achieve neutrality by 2060. In line with these priorities, Fidelity analysts began speaking to Anhui Conch’s management about emissions targets in November 2020.

Even before our engagement started, Conch’s management had shown a strong desire to improve the company’s ESG practices, and progress has become more tangible over the last two years. Reflecting some of the improvements, MSCI raised Anhui Conch’s sustainability rating to B in July 2021 from CCC and further raised it to BB in August 2022.

More recently, Chinese cement prices have been trending down this year, with demand from homebuilders slowing as the property market slumps. Meanwhile, rising coal prices are putting another squeeze on the profit margins of cement production. These industry headwinds add to the difficulty of pushing through a decarbonisation agenda, especially for China’s smaller or more weakly capitalised producers. However, Anhui Conch has indicated that it aims to stay the course on cutting emissions and sticking to its sustainability targets, aided by a balance sheet that is among the strongest in the sector.

“Even in a downturn, we as an industry leader will try to maintain industry stability as well as our good image,” Anhui Conch CEO Li told our analysts in the November meeting. “In the current downcycle, our ESG spending will only increase, and this will add to our competitive edge,” he added.


### Hard gains

Cement production relies heavily on coal-fired power plants, with each tonne of output typically emitting 0.6 tonnes of carbon. In addition, the mining of lime, a key cement ingredient, can be highly pollutive, and cement itself, once turned into concrete structures, can contribute to urban heat effects.

To cut its own emissions, Anhui Conch has focused on limiting the use of coal and electricity per tonne of cement, as well as boosting its overall operating efficiency. It is switching to biomass fuel, capturing carbon dioxide, and reusing waste heat to generate electricity. As a result, emission density has dropped to 839 kilograms per clinker tonne in 2021 from 855 kilograms in 2017. Clinker, the main material for making cement, typically contributes to 80 per cent of cement’s weight. Anhui Conch has set a very specific target - 6 per cent total reduction in emission density in the five years through 2025, when it aims to achieve 790 kilograms per clinker tonne. Currently, the world’s biggest cement producer, Lafarge Holcim, emits about 743 kilograms of carbon dioxide per clinker tonne.

![chart-1-anhui-conch-plan.png](/uploads/chart_1_anhui_conch_plan_5829cb7025.png)

In addition, Anhui Conch plans to follow Lafarge in adopting more biomass fuel, which could eventually help to cut emissions by another 10 to 20 per cent. The company’s first biomass plant began operating in late 2020, with a capacity to consume 300,000 tonnes of plant material each year, which can replace 75,000 tonnes of coal and help reduce some 200,000 tonnes of carbon emissions. A second and larger biomass plant is under construction.

Pursuing sustainability at the expense of short-term margins, the company has bumped up its annual environmental spending to 2 billion renminbi (around $300 million). Domestically, the company has achieved the lowest emission density among large cement producers when measured by unit of output.


###  Open dialogue

Anhui Conch was already working to improve its sustainability performance before Fidelity’s engagement began. But as our analysts drilled into the details, they realised that the cement maker was selling its efforts short based on how it was disclosing and benchmarking its emissions data, and that some global sustainability rating agencies had been judging the company based on its emissions per million dollars of revenue. This ignores one of the basic dynamics of the global cement industry: prices are highly localised because of the high costs of shipping such a heavy material over long distances. The result in China is that cement is typically 40 to 50 per cent cheaper than in the West.

Fidelity analysts realised that applying revenue-based emissions metrics would by nature severely disadvantage the Chinese company when compared with its global peers. Anhui Conch took our advice that it would be more accurate for making cross-border comparisons - and a better reflection of its efforts to reduce carbon footprint - to switch to volume-based metrics that capture emissions per unit of actual cement production.

Moreover, the company has taken it upon itself to find new ways to reduce its emissions of carbon and other harmful greenhouse gases. For example, it has developed an efficient system to curb nitrogen oxide emissions, which in many cases could cause more global warming than carbon emissions. Based on an old technology known as selective catalytic reduction, the system uses special catalysts to convert nitrogen oxide into harmless nitrogen gas and water vapour that can be safely released into the atmosphere.

To reduce its reliance on electricity from coal-fired plants, which still account for most of China’s power supply, the firm has started building solar power plants with a total planned capacity of 1 gigawatt. The solar plants would be able to meet nearly one tenth of Anhui Conch’s electricity needs, based on its power consumption in the last two years.

Anhui Conch also recently formed a dedicated ESG committee to supervise decarbonisation and other sustainability issues, while Fidelity’s own engagements with Anhui Conch have also extended beyond environmental issues to include areas such as corporate governance.


###  A crucial front in decarbonisation

While Chinese cement producers are making some progress in cleaning up their act, the industry remains a huge polluter and one of the most difficult to decarbonise. Cement production still accounts for some 12 per cent of China’s total carbon emissions, compared with an estimated global ratio of about 7 per cent, given the outsized role that the sector plays in the economy.

Times may be changing. Over the last few years, China has carried out supply-side reforms to its cement industry, shutting down numerous small and pollutive plants, or directing state-owned cement giants to acquire them as part of an industry consolidation. In the autumn of 2021, nationwide power curtailment driven by soaring coal prices and other bottlenecks in the energy supply chain further reduced cement output.

There are signs that other large cement makers in China are starting to follow Anhui Conch’s lead in ESG commitments, as the government pushes ahead with nationwide decarbonisation targets. We believe the drive toward net zero, combined with serious engagement by investors, will help eventually firm up a greener path for China’s cement industry.

**[ Learn more about Fidelity’s sustainable investing approach](https://www.fidelity.com.sg/sustainable-investing)**

This publication is prepared on a general basis for information only. It does not have regard to the specific investment objectives, financial situation and particular needs of any specific person who may receive it. You should seek advice from a financial adviser. Past performance and any forecasts on the economy, stock or bond market, or economic trends are not necessarily indicative of the future performance. Views expressed are subject to change, and cannot be construed as an advice or recommendation. References to specific securities (if any) are included for the purposes of illustration only. This advertisement has not been reviewed by the Monetary Authority of Singapore. FIL Investment Management (Singapore) Limited (Co. Reg. No.: 199006300E). Fidelity, Fidelity International, and the Fidelity International Logo and F Symbol are trademarks of FIL Limited.













ESGenius: Cementing a greener future in China

large_The young man sat on the dock with urban skyline and skyscrapers in Marina Bay Singapore (low res).jpg

medium_The young man sat on the dock with urban skyline and skyscrapers in Marina Bay Singapore (low res).jpg

small_The young man sat on the dock with urban skyline and skyscrapers in Marina Bay Singapore (low res).jpg

thumbnail_The young man sat on the dock with urban skyline and skyscrapers in Marina Bay Singapore (low res).jpg

The young man sat on the dock with urban skyline and skyscrapers in Marina Bay Singapore (low res).jpg

BUILDING NEW MARKETS

With the UN predicting continued massive population growth in Asia, green bonds could help secure a long-term sustainable infrastructure for all [1].

Key takeaways:

![image-amundi.jpg](/uploads/image_amundi_260e00b843.jpg)

Asia’s fast-growing economies, which are increasingly focused on renewable energy sources and sustainable infrastructure, could be fuelled by the rise of ESG investing, according to Albert Tse, CEO South Asia at Amundi. ‘South Korea and Japan have pledged net-zero emissions by 2050, while China has committed to carbon neutrality by 2060. But it is not just an increasing climate awareness and the desire for better environmental quality that is fuelling ESG mentality’, Tse said. The vast trend of urbanisation is also playing a part. To put this in perspective, Asia is expected to be one of the biggest sources of urban population growth over the coming years: the UN predicts that by 2050 India will have added another 416 million urban dwellers, while China will have added 255 million. [1] ‘Asia is facing a huge demand for new buildings as more and more of its population move from rural areas to the cities, Tse said. He cites the case of a real estate builder in Vietnam who needed to issue debt to finance the creation of a new building. ‘He could either have issued a conventional bond or a green bond. The advantage of the green bond is that the finished building will be expected to have a much greener profile, with better insulation and lower energy costs. So, the added value of the building may be greater than a conventional one in 10 years’ time,’ he said. Drawn from a real encounter, we believe this example brings home the fact that someone investing in a project financed through green bonds effectively takes a more holistic stance that the value of the finished project may be higher because of the intrinsic green component, Tse said. ‘This is particularly relevant as Asian economies start to re-open and governments prioritise re-building in the wake of the pandemic,’ he said. At the same time, the Covid-19 pandemic has resulted in profound social consequences through the region: in particular, disruption to education, employment crises and the impact on healthcare systems have all increased social inequality which may well have lasting effects. ‘It has been difficult to find ways to invest in this field, and that is why we launched an innovative solution in late 2020. Our social bond strategy seeks to promote the financing of social projects to address these areas and we hope it will follow what we consider to be the success of our social thematic strategies,’ he says. Bonds dedicated to social projects present particular challenges, because many such projects are by nature small scale, often at the level of microfinance: for example, a scheme to help people in a particular locality. And this requires particular investment capabilities, Tse points out. ‘It is possible that in the wake of the pandemic, we may see companies investing in bigger projects on the social side, because of the greater inequality that will be evident throughout the region. We could, for example, see larger scale initiatives within education. But at present most of the projects remain small in scale. This is where Amundi’s size and experience enables the company to channel money secured from its international investors to provide finance for smaller projects that have the potential to have a real impact.’ 

## *Asia is facing a huge demand for new buildings as more and more of its population move from rural areas to the cities*

Sources: 
[1] United Nations ‘Around 2.5 billion more people will be living in cities by 2050, projects new UN report’

IMPORTANT INFORMATION Unless otherwise stated, all information contained in this document is from Amundi Asset Management S.A.S. and is as of 30 May 2022. Diversification does not guarantee a profit or protect against a loss. The views expressed regarding market and economic trends are those of the author and not necessarily Amundi Asset Management S.A.S. and are subject to change at any time based on market and other conditions, and there can be no assurance that countries, markets or sectors will perform as expected. These views should not be relied upon as investment advice, a security recommendation, or as an indication of trading for any Amundi product. This material does not constitute an offer or solicitation to buy or sell any security, fund units or services. Investment involves risks, including market, political, liquidity and currency risks. Past performance is not a guarantee or indicative of future results. All investors should seek professional advice prior to any investment decision, in order to determine the risks associated with the investment and its suitability.

Date of first use: 30 May 2022









Why Asia’s green economy is growing fast

medium_organgutan_stepping_on_tree_branch_945x470.jpg

small_organgutan_stepping_on_tree_branch_945x470.jpg

thumbnail_organgutan_stepping_on_tree_branch_945x470.jpg

organgutan_stepping_on_tree_branch_945x470.jpg

![organgutan_stepping_on_tree_branch_945x470.jpg](/uploads/organgutan_stepping_on_tree_branch_945x470_05664929a5.jpg)


#### Heatwaves and other extreme weather events are warning us to rethink our relationship with nature. The financial sector must play its part.


![peter-harrison-circle.jpg](/uploads/peter_harrison_circle_3ab1b11b7d.jpg)
**Peter Harrison**, Group Chief Executive


Because we don’t quantify the benefits of nature, we overlook them altogether. Johan Rockström, the Swedish climate scientist who I recently shared a platform with at London Climate Action Week, reaffirmed this point – that if it weren’t for nature we’d already have crossed the 1.5 degree threshold.

There’s a well-known saying in management that “what gets measured gets managed”: a cliché, perhaps – but frighteningly accurate in the case of nature.

The world is waking up to the fact that our global economy must become not just net zero, but also nature-positive. Heatwaves and other extreme weather events are reminding us of the fragility of our natural environment. That means knowing what nature is worth.

It took us 15-20 years to get the language of carbon – and the disclosures of carbon – to become an intelligible feature of company reports. Today it is virtually impossible to get good data around nature. But we haven’t got 15-20 years.

More than half of our global GDP is dependent on the natural world. Protecting and preserving nature can make a powerful contribution to efforts to mitigate climate change. And there is a social imperative too: unless natural climate solutions create positive social impacts for local citizens and communities living on the land, they won’t be sustainable. Investors must partner broadly and deeply.

The response must be vigorous. As a company, we learned that to make meaningful change on diversity and inclusion would involve a revolution in our culture. The same root-and-branch revision is required in our approach to nature.

Asset managers, in particular, have to fundamentally change the way they operate.

At Schroders, we are taking a three-pronged approach. We have pledged to change the behaviour toward nature of every company we invest in; we will create new nature-based investment products, and use our solutions business to channel capital into new and existing funds. By doing so, we help our clients make a positive impact while also diversifying the sources of their returns.

Just as with net zero, the role of the financial sector in efforts to halt and reverse nature loss is both clear and critical. Following the recent delay of the United Nations biodiversity summit, COP15, to December this year, we must use these months to bring more of the finance sector to the table. There is no time to waste.

Action on nature starts with action to end deforestation. The IPCC estimates that “agriculture, forestry and other land use” contributes 22% to global emissions and half of that (11%) is from deforestation and land conversion.

That means getting measurement and data right. At Schroders, we’ve built a deforestation scorecard to look at exposure to and management of deforestation risk for companies. And we have made natural capital and biodiversity a priority for active engagement with companies.

Deforestation is increasingly an investment risk, but nature is also a significant investment opportunity. Natural climate solutions are efforts to conserve, restore or improve ecosystems in order to absorb and store carbon from the atmosphere. Analysis has estimated that these solutions have the potential to provide around a third of the climate action needed to achieve the Paris Agreement goals and avoid the worst effects of climate change.

One statistic starkly captures the issue: they may be a third of the solution, but today, natural climate solutions receive less than 3% of all global climate finance. How do we close that gap?

I believe that we can create a tipping point, and accelerate investment.

The investment case gets stronger by the day, rooted in the price of carbon credits. Demand for high-quality carbon offsets is set to grow exponentially, driven by national net-zero ambitions alongside major private sector commitments. This opportunity is underpinned by increasingly sophisticated data and tools that are allowing us to start to value the world’s natural assets.

While supply of projects remains a challenge, the growing demand and activity in this space is creating new opportunities to institutionalise project financing, structuring and development.

Schroders is excited to go into partnership with Conservation International with plans to create one of the first dedicated natural capital impact investment managers in Singapore. Called Akaria Natural Capital, the venture aims to achieve the scale and expertise to deploy with impact – and contribute new ideas for how to solve some of the bottlenecks for funding. 

Getting to grips with the social imperatives around nature action is fundamental to this partnership, to ensure these investments work for people, as well as places.

What’s exciting is the increasing collective momentum of the investment industry on this agenda. There are now $21 billion assets under management in natural climate solutions – doubling in the last five years. The Natural Capital Investment Alliance, launched by the Prince of Wales at COP26, is an important step in this shift. The 15 members of this group all have, or will have, investment vehicles that help channel capital into nature-focused projects.

The energy transition is complex. The transition to a nature-positive world will be fiendishly difficult. But it is imperative, urgent, and we have to make it investible. That’s why as we look ahead to the second half of the year, the financial sector must join the chorus of actors stepping up to take action on nature.






Peter Harrison: why we must make nature investible

large_LIT banner.jpg

medium_LIT banner.jpg

small_LIT banner.jpg

thumbnail_LIT banner.jpg

LIT banner.jpg

# About the Initative

Let’s Invest Together! (LIT!) is the culmination of significant cross-industry effort, with IMAS’ Gamification workgroup, collaborating with MoneySense, CPF Board, and the SGX Group, to accelerate Optimai, our fintech partner discovered through the IMAS Digital Accelerator Program (DAP). By leveraging on technology, and the mechanics of gamification, we have created a prototype of a fast-moving investment education game, available on iOS and Playstore, readily accessible to the investing public. 


<iframe width="560" height="315" src="https://www.youtube.com/embed/TRBCZukn7yo" title="YouTube video player" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture" allowfullscreen></iframe>

Given the evolution of the investor base, many of whom have become more digitally savvy, the IMAS Education Committee saw the opportunity in 2020 to leverage on gaming technology and the IMAS DAP to create a fun and exciting utility to help build investment knowledge amongst the investing community.

Utilising real data to simulate actual events, the game is uniquely able to help investors better understand how the various asset class interact, their risk profile and how their investment decisions can impact their portfolios, thereby improve their ability to asset allocate and build resilient investment portfolio for themselves.

##### Download the game now:

1. [Google Playstore](https://play.google.com/store/apps/details?id=com.Optimai.LetsInvestTogether)
2. [Apple Store](https://apps.apple.com/app/lets-invest-together/id1576667625)

Let's Invest Together! (LIT!)

small_US stock market trader article.jpg

thumbnail_US stock market trader article.jpg

US stock market trader article.jpg

![US stock market trader article.jpg](/uploads/US_stock_market_trader_article_d88fc966e8.jpg)

Author: Valerio Baselli

Looking at the market today, it's easy to forget where we were at around 15 months ago. Many of the market declines of the past decade or so, including the stock market crash of 2008, are fast becoming faded memories for most of us. But it is the investors who endured these difficult times came out in perhaps the best shape, and as is often the case, those who had the nerve to stay invested were richly rewarded.

And yet, the decision about whether to change your investment strategy or sell a fund is usually not clear-cut, even in hindsight. After the dust has settled on a decision and the investment has performed well or poorly, the “right” answer is wholly dependent on the individual. Selling criteria are not a one-size-fits-all list that fit every investor, but there are some situations when selling is particularly ill-advised. Christine Benz, director of personal finance at Morningstar, picks these three key examples.

**Poor Short-Term Performance**
 
It’s almost never a good idea to sell a fund based on weak performance alone, especially over the short-term. You might have been tempted to sell in last year's market sell-off for example, but we now know the Covid crash was the shortest in history. Instead, if a fund is lagging its peers or an index, your first move should be to investigate why that is. It could be that the manager is simply sticking with an investment strategy that happens to be out of favour, as has been the case with many value-leaning funds in recent years. But weak performance may also be a sign that something more serious is afoot - Morningstar's own research has found that many active funds fail to beat the market over the long-term.

Researching an investment’s fundamentals can be time-consuming, which is why you don't want to get too caught up in investigating short-term bouts of underperformance. Most funds, especially those that are using truly active strategies, will trail their peers at times, often for very good reasons and sometimes for a few years or more (that could be the case with some perfectly solid, defensively positioned funds during a market rally, for example).

Instead, save your energy for checking up on funds when they've underperformed over longer stretches of time or in a period when you would have expected them to perform well. If, for example, you selected a fund because of its low-risk tendencies, but it lost far more than its peers in 2020, that's a legitimate reason to ask whether something about its strategy changed or its risk controls weren’t what you thought they were. And even if the fund isn’t bad, it may not be a good fit in your portfolio.

**Inconsistent Performance**

On a similar vein, investors often get themselves worked up when a fund’s relative returns are inconsistent on a year-to-year basis. Sure, it can be comforting to see a fund land in its category's top half like clockwork—and a small handful of funds has actually managed to generate return rankings that have been remarkably consistent from year to year.

But holding all of your funds to that standard would cause you to kick out some fine offerings that, while not consistent performers on a calendar-year basis, are consistent where it counts: they employ their strategies with discipline and don't waver, even if the market isn't rewarding them in the near term.

It's also important to remember that a calendar year is a fairly short and arbitrary time period, and a fund that has looked erratic over January-December time periods may appear perfectly consistent when measured over a different 12-month time frame—say, from April to March of each year. Investors shouldn't get too hung up on year-to-year performance consistency when deciding what to hold in their portfolios. Looking at annualised returns can be a better way to judge long-term performance, as these smooth out good and bad periods to indicate what average return an investor has received each year. 

**Macroeconomic News**

Macroeconomic news - whether it's the direction of interest rates, rising inflation or GDP growth in China and India - often appears right alongside news about the market's trajectory. And it's true that what's in the headlines has the potential to move the markets up or down on a daily basis, or even over longer time frames. The trouble is that by the time a certain news item makes its way into the headlines, other market participants have already digested it and priced it in.

If you decide to sell your fund based on that news, you're likely to be too late. Instead, a better tack for investors, at least as it relates to their portfolios, is to keep their heads down and focus on factors that they can control: their savings and spending rates, the quality of their investment holdings, and the total costs they pay for those investments. There is much virtue in tuning out the noise when it comes to managing your portfolio.





*©2021 Morningstar. All rights reserved. The information, data, analyses and opinions presented herein do not constitute investment advice; are provided as of the date written, solely for informational purposes; and subject to change at any time without notice. This content is not an offer to buy or sell any particular security and is not warranted to be correct, complete or accurate. Past performance is not a guarantee of future results. The Morningstar name and logo are registered marks of Morningstar, Inc. This article includes proprietary materials of Morningstar; reproduction, transcription or other use, by any means, in whole or in part, without prior, written consent of Morningstar is prohibited. This article is intended for general circulation, and does not take into account the specific investment objectives, financial situation or particular needs of any particular person. Investors should consult a financial adviser regarding the suitability of any investment product, taking into account their specific investment objectives, financial situation or particular needs, before making any investment decisions. Morningstar Investment Management Asia Limited is licensed and regulated by the Hong Kong Securities and Futures Commission to provide investment research and investment advisory services to professional investors only. Morningstar Investment Adviser Singapore Pte. Limited is licensed by the Monetary Authority of Singapore to provide financial advisory services in Singapore. Either Morningstar Investment Management Asia Limited or Morningstar Investment Adviser Singapore Pte. Limited will be the entity responsible for the creation and distribution of the research services described in this article.*

3 Bad Reasons to Sell a Fund

large_header-48.jpg

medium_header-48.jpg

small_header-48.jpg

thumbnail_header-48.jpg

header-48.jpg

![header-48.jpg](/uploads/header_48_f7dbb6ac83.jpg)

‘Doing (almost) nothing’ most advantageous for investors – according to newest NGFS climate scenario update
30 September 2022

Earlier this month the global central banking community, the Network for Greening the Financial System (NGFS¹¹), released its third vintage of climate scenarios for forward looking climate risks assessment.

At Ortec Finance we are passionate believers in the importance of integrating forward-looking climate analysis into investment decision-making. Therefore, we applaud NGFS’s efforts in socializing, designing and making readily available top-down climate scenarios. Nevertheless, an expert critical analysis of these scenarios remains important in order to challenge modeling methodologies and assumptions. How else to progress in the field?

In our [earlier article](https://www.ortecfinance.com/en/insights/blog/stargazing-or-have-the-ngfs-and-the-bank-of-england-missed-an-opportunity-to-drive-the-race-to-zero), we set out an extensive analysis of the strengths and limitations of the earlier NGFS climate scenario versions. Many of the comments made remain valid in respect to this latest update.

Key additions include:

- **Increased granularity of sectors** - Transport: Freight and Passengers, and Industry: Cement, High-value chemicals, Non-ferrous metals, Steel and Others
- **Physical risk GDP losses** have been doubled. GDP losses from chronic physical risks reach more than 6% in 2050, and up to 18% by the end of the century in the Current Policies scenario.
- **Acute physical risks** (cyclones and river flood) are now included but only translated to GDP.

These changes have resulted in quite different impacts from the earlier version. For example, the shock to equity is materially larger.

**However, our team at Ortec Finance, in collaboration with macro-modeling experts at our partner organization [Cambridge Econometrics](https://www.camecon.com/), remain concerned.**

When looking at US equity peross the 6 NGFrformance acS scenarios on a 30-year horizon, the Current Policies and the NDC scenarios show the best performance. They strongly outperform all the other 2 degrees and Net Zero scenarios. This is a harmful message and not a credible one. It points towards a continuing underappreciation of physical risks, and omission of likely market pricing-in and market volatility dynamics and modelling choices.

### Figure 1: Cumulative returns of US equities across NGFS climate scenarios
![chart.jpg](/uploads/chart_1bef62141a.jpg)

The points below explore the NGFS’s climate scenario limitations in more detail:
1. **Physical risk modelling remains problematic.** The literature used as a basis for NGFS slow onset event modelling is one of the most optimistic in its field . NGFS assumes physical risk to be linear, therefore completely side-stepping the issue of non-linear feedback loops and tipping points. Regarding the extreme weather modelling, a first step has been made, but effects have not yet been translated to financial impacts.
2. **No market risk considered.** The financial impacts shown in the NGFS scenarios capture only direct impacts and how they are expected to unfold in the real economy. They do not include a climate scenario narratives layer on how financial markets may react to transition- and physical risks materializing in the real world. Inclusion of market pricing-in dynamics and/or market sentiment shocks can significantly change the time horizon in which climate-related risks or opportunities become material to a portfolio’s risk and return implications.
3. **Macro-model choice.** Even though the NGFS states that it reflects ‘the uncertainty inherent to modelling climate related macroeconomic and financial risks’ the NGFS scenarios only look at general equilibrium model results. Non-equilibrium models - which are models recognised for being better suited to capture the dynamics of economies in transition – have not been considered. For more information on equilibrium vs non-equilibrium models please refer our publication in The Actuary magazine [here](https://www.theactuary.com/2022/03/01/under-bonnet-different-economic-engines-drive-climate-change-scenario-models).

In addition to the main points above, the scenarios are rife with inconsistencies and unclarities we cannot bring home. A couple of examples:

ּּ• Carbon prices are lower in Phase 3 transition scenarios compared with Phase 2 – in 2050 the carbon price in the previous Delayed transition scenario reaches over USD (2010) 600 t/CO2 while it approaches USD (2010) 400 t/CO2 now. Without further information it is unclear how temperature outcomes are maintained while policy ambitions are dialled down.
ּּ• The global CO2 emissions trajectory in the Current Policies scenario is almost flat between now and 2040, which is highly unlikely given a strong economic growth and a relatively weak set of short-term decarbonisation policies currently implemented.

In view of the above we would recommend that the NGFS:
ּּ• Reflect on the danger of the overall messaging delivered via these climate scenarios that are likely to be widely accepted and used by financial institutions around the world. Do Central Banks really intend to signal complacency when it comes to portfolios’ climate risk exposure?
ּּ• Reassesses the appropriateness of its slow onset physical risk modelling to ensure that it better reflects the full range of uncertainty.
ּּ• Supply detailed narrative descriptions of the scenarios to correctly understand, interpret and apply the scenarios in business and financial analyses and nuanced decision-making.
ּּ• Provide sensitivity analysis of the scenario results to provide insights into the key assumptions that move the dial on reaching low carbon outcomes.

¹ The NGFS scenarios are based on a climate related damage function estimated by Kalkuhl, M. & Wenz, L.: The impact of climate conditions on economic production. Evidence from a global panel of regions. J. Environ. Econ. Manag. 103, 102360 (2020). There is a wide range of publications on the estimation of climate related damage functions, all of which provide a lower bound of likely damages due to methodological and data constraints (eg. no climate tipping points taken into account), but among those, the Kalkuhl & Wenz (2020) provides a relatively small damage estimate. We think the Burke, M. and V. Tanutama: Climatic Constraints on Aggregate Economic Output, Working Paper 25779, National Bureau of Economic Research, April 2019 provides a better estimate, which also implies larger economic damages due to temperature rise. A good literature review with cross-comparisons is provided by Piontek, F. at al.: Integrated perspective on translating biophysical to economic impacts of climate change, Nature Climate Change, Vol 11, July 2021.

![ces-compass.png](/uploads/ces_compass_cdd891440d.png)

Ortec Finance’s [**Climate & ESG Solutions**](https://www.ortecfinance.com/en/solutions/climate-esg-solutions) deliver state-of-the-art customizable solutions for climate resilient investment decision-making by combining independent, research-backed climate & ESG knowledge, advanced financial models, and innovative technology.

[**Climate MAPS**](https://www.ortecfinance.com/en/insights/product/climate-maps) quantifies your portfolio's exposure to systemic climate-related financial risks & opportunities across different climate scenarios. This enables investors to consistently integrate climate risk into risk-management, strategic asset allocation and asset liability management for investment decision-making.

When it comes to investors, we recommend they ensure that they are well versed in climate-scenario methodologies and associated assumptions in order to ensure well informed use of these tools. For more information, please contact us below.

![ortect-finance1.jpg](/uploads/ortect_finance1_11657515e9.jpg)

Email: contact@ortecfinance.com

![ortect-finance2.jpg](/uploads/ortect_finance2_9f9fbd7766.jpg)

Email: contact@ortecfinance.com










Stargazing II

small_SGX ESGenome_800 x 250px.jpg

thumbnail_SGX ESGenome_800 x 250px.jpg

SGX ESGenome_800 x 250px.jpg

![SGX ESGenome_800 x 250px.jpg](/uploads/SGX_ES_Genome_800_x_250px_fac164bdf9.jpg)

[SGX ESGenome](https://www.sgx.com/sustainable-finance/esgenome), a digital disclosure portal for companies to report Environmental, Social and Governance (ESG) data in a structured and efficient manner, and for investors to access such data in a consistent and comparable format, was launched in September 2022.

SGX ESGenome enables companies to report metrics aligned with global standards and frameworks, ensuring regulatory compliance that meets investor needs for consistent and comparable ESG data.

It is one of the four digital platforms of [Project Greenprint](https://www.mas.gov.sg/-/media/MAS/News/Media-Releases/2021/Infographic_MAS-Project-Greenprint.pdf) by the Monetary Authority of Singapore (MAS), a culmination of MAS and SGX’s efforts to simplify, standardise and improve corporate disclosures, as well as enhance stakeholder access and use of consistent and comparable ESG data.

SGX ESGenome is a Software-as-a-Service (SaaS) provided for SGX-listed companies at no cost as it aims to support companies in ESG-related disclosures, data collection, tracking and reporting

Companies will have access to the list of [SGX Core ESG Metrics](https://www.sgx.com/regulation/sustainability-reporting#SGX%20Core%20ESG%20Metrics) which is mapped to global standards and frameworks. The list of SGX Core ESG Metrics was published in 2021 to promote the alignment between reporting parties and users of ESG information, allowing for greater consistency and comparability across companies and sectors.

SGX ESGenome also offers more than 3,000 other ESG metrics that are mapped across global standards and frameworks such as the Global Reporting Initiative (GRI), Task Force on Climate-Related Financial Disclosures (TCFD), and Sustainable Development Goals (SDG). Companies may also choose to create other custom metrics that are industry/company specific. 

Key features of the platform include:

•	Framework agnostic platform with metrics mapped across global ESG reporting standards and frameworks including GRI, TCFD, SDG, to meet with different requirements

•	Access to SGX Core ESG Metrics and over 3,000 global ESG metrics with guidance on disclosure

•	Create custom/bespoke metrics that are industry or company specific

•	Monitor your ESG performance over time, and view insights and analytics on the platform

•	Download ESG datasets in a structured format

•	Assign multiple accesses for internal stakeholders as part of your regular sustainability reporting, ESG data collection and tracking process

•	Option to select data/information to be kept private as part of an internal workflow management tool

•	Auto-generate sustainability reports within the platform


For investors and financial institutions, SGX ESGenome will provide access to relevant and comparable ESG data that allows for meaningful peer benchmarking and tracking of sustainability commitments. This enables capital to be mobilised more efficiently toward sustainable companies and projects. 

MAS noted that it will also draw on the learnings from ESGenome to address the reporting needs of the broader universe of corporates, notably small and medium-sized enterprises, and supply chain partners and suppliers, as part of its ongoing work on Project Greenprint.

The initiative is supported and welcomed by many industry partners. Click [here](https://links.sgx.com/FileOpen/2022-09-12-ESGenome%20press%20release-SGX-FINAL.ashx?App=Announcement&FileID=731313) to read quotes by the following partners: The Association of Banks in Singapore (ABS), Investment Management Association of Singapore (IMAS), Securities Association of Singapore (SAS), SGListCos, Sustainability Reporting Advisory Committee (SRAC) and Ernest & Young.











Launch of SGX ESGenome Disclosure Portal to streamline sustainability reporting and enhance access to ESG data

large_stacs-image1.jpg

medium_stacs-image1.jpg

small_stacs-image1.jpg

thumbnail_stacs-image1.jpg

stacs-image1.jpg

![stacs-image1.jpg](/uploads/stacs_image1_f01ff5df04.jpg)

Author: Benjamin Soh, Co-Founder & Managing Director, STACS

It’s becoming crystal clear that for the finance industry to make good decisions in terms of capital allocation to environmental, social, and governance (ESG) assets, we will need to improve transparency and trust at the data level.

Asset managers are getting savvy to the need for better screening and scoring of everything in the ESG universe, as well as understanding the data they are receiving from ESG data providers while using more of their own analytics capabilities to project out into the future.

One of the remaining challenges is an over-reliance on publicly available non-financial ESG data, with what’s available in the private sector typically far more fragmented and non-transparent, making it hard for institutions and asset managers operating in private markets when it comes to ESG screening.

## Financial market modeling needs better ESG data

In addition, there is a lack of real-time ESG data, with much of it being historic in nature due to reporting happening once or, at best, twice a year.

As capital allocation decisions are based on complex models that make assumptions on future outlooks based on present data, this lack of transparency around ESG data makes it very difficult to accurately predict the future in these areas and therefore to be effective capital allocators.

In particular, we have observed that large asset managers are at more of a disadvantage versus banks and insurers who are more likely to have confidential/non-public data available from their expansive customer bases.

However, with much of today’s asset allocation being done by the large asset managers such as BlackRock and Vanguard, who between them manage nearly $20 trillion in assets, it is clear the ESG data situation could lead to some less-than-optimal capital allocation decisions.

## Truly efficient markets need gold data standards

This, potentially, undermines the very idea of efficient markets as more and more investments are being screened for ESG criteria using sub-optimal data.

Beyond just the accessibility of data, there is another headache on the horizon: no “single source of truth”, something the blockchain was originally created to help address.

We believe [STACS](https://stacs.io/) can be an upstream data partner to the ESG ratings agencies, many of whom are also grappling with the challenge of a lack of public data and single source of truth but whose clients (the asset managers) are looking to them to help solve.

An analysis of 62 of the largest asset managers worldwide found that most use between two and five different ratings providers and some even use up to 10 different third-party vendors to cover their ESG data needs, according to EY.

Alternative data sources will become increasingly important in the desired goal of reliable real-time ESG data through technologies such as satellites, IoT, and drones that offer insights into supply chains, production (i.e. agriculture), and transportation networks.

ESGpedia - Enhancing Trust in ESG Data and Finance

![Dr-Darian-at-Greenprint-Industry-Showcase-Event.jpg](/uploads/Dr_Darian_at_Greenprint_Industry_Showcase_Event_fa5110e38c.jpg)

Dr Darian McBain, chief sustainability officer of MAS, was the guest of honour at the Project Greenprint industry showcase event, where ESGpedia was launched.

[ESGpedia](https://esgpedia.io/), officially launched on 18 May 2022 at the Project Greenprint Industry Showcase event held at Google, powers the ESG Registry of Monetary Authority of Singapore’s (MAS) Project Greenprint. 

There’s a profound disconnect between the ESG data financial institutions and companies need, and what is available to them.

Serving both financial institutions and corporates, ESGpedia aims to provide two gold standards for asset managers: that single source of truth we have been talking about, as well as holistic ongoing project data and ESG certifications across multiple sectors, shining a light on both public and private companies.

First of its type, ESGpedia aggregates all ESG efforts and provides the necessary digital tools for effective ESG finance, bridging the gap in ESG data and finance where there is no other such platform today.

**Dr Darian McBain, Chief Sustainability Officer at MAS**, said, “The launch of the blockchain-based ESGpedia platform establishes a robust base for powering the Greenprint ESG Registry, combining STACS’ work on aggregating high quality ESG data from multiple certification bodies and verified sources, with the ability for financial institutions, corporates, and regulators to access this trusted data via a single source in accordance with their needs. In time, data housed in the Greenprint ESG Registry will form a central pillar that underpins the financial sector’s effective mobilisation of capital towards sustainable projects, as well as the accurate tracking and quantification of emission reductions, abatement levels, and other sustainability KPIs linked with these projects.”  

Companies going green need easier access to ESG financing, while financiers with idle capital can leverage on more insightful data to better allocate funds to ESG effectively. 

We invite financial institutions and corporates large and small to get in touch with us if you’re interested to navigate the opportunities in going green via ESG data and technology – only together we can make good progress towards solving the ESG data puzzle and truly enable effective sustainable finance for the industry. 

Read the press release [here](https://stacs.io/esgpedia-officially-launches-aggregating-verified-esg-data-and-certifications-across-various-sectors-to-enable-more-effective-green-finance/).

Sign up for a trial of [ESGpedia](https://esgpedia.io/)

[Watch financial institution partners comment on ESGpedia and how it enables holistic ESG data to support Green Finance](https://youtu.be/JufEFPT0hJg)


Why data remains the biggest ESG investing challenge for asset managers

Ed Perks, Chief Investment Officer of Franklin Templeton Investment Solutions discusses how rapidly changing economic and market conditions could lead to a shift in strategy for income investors.

Increasing Yields: Strategy Shifts for Income Investors

Does investing in ESG hurt investment returns? Are ESG portfolios only concerned with saving the environment? AllianceBernstein's Aditya Monappa tackles these myths and answers investors' burning questions.

Beyond catchy taglines: Navigating ESG investing with AllianceBernstein

In the second episode of a four-part series, we explore briefly how the pandemic has prompted Singaporeans to kickstart retirement planning. 

"Rethinking Retirement" is a study commissioned by Fullerton Fund Management to find out what Singaporeans think about retirement, as well as how digital technologies and COVID-19 have altered their approach to it. 

Impact of COVID 19 on retirement planning

A joint initiative of IMAS and LIA