April 23, 2025 • 30 mins
"It’s very important to understand that we need to deliver sustainability, not simply be passionate about it," says Eric Lim, managing director and chief sustainability officer at United Overseas Bank, our first guest from Asia on the ESG Currents podcast. Lim joins Conrad Tan, Bloomberg Intelligence’s ESG integration analyst for Asia-Pacific, to discuss what the ESG backlash means for companies' sustainability efforts, the role of banks in driving sustainable practices in different industries, and the nature-climate nexus and business dependencies on natural capital. They also talk about the importance of aligning with ecosystem partners to enhance impact in a region spanning myriad political structures and development priorities.
This episode was recorded on April 2, 2025.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:09):
ESG has become established as a key business theme as
companies and investors seek to navigate the climate crisis, energy transition,
social mega trends, mounting regulatory attention and pressure from other stakeholders.
The rapidly evolving landscape has become inundated with acronyms, buzzwords,
and lingo. We aim to break these down with industry experts.
(00:31):
Welcome to ESG Currents, your guide to navigating the evolving
ESG space, one topic at a time, Brought to you
by Bloomberg Intelligence, part of Bloomberg's research department with five
hundred analysts and strategists working across all major world markets.
I'm Conrad Dunn, ESG integration Analyst for APEC at Bloomberg Intelligence,
(00:51):
and I'm your host for today's episode. Today we're talking
about sustainable finance in Asia, the role of banks and
driving sustainable practices in different industries, How considerations such as
supporting a just transition and biodiversity protection influenced the strategy,
and what the backlash against ESG in key parts of
the world could mean for company's sustainability initiatives. Joining me
(01:14):
today is Eric Limb, Managing director and chief Sustainability Officer
of United Overseas Bank, widely known as UOB. UOB has
an extensive footprint across Asia and especially deep roots in
Southeast Asia. Eric has held many roles in banking and
finance for over two decades prior to becoming Chief Sustainability
(01:34):
Officer at UOB, giving him deep insight into the role
of global finance in driving sustainability outcomes and also how
they are influenced by shifts in jee politics, investor sentiment,
and social norms. To set the scene for our listeners,
Eric and I are sitting in a studio at a
Bloomberg office in Singapore, a short walk from uob's global headquarters,
(01:55):
and it's a nice school day outdoors. Eric, really delighted to.
Speaker 2 (01:59):
Have you with us. Modern Conrad, thanks for having me now.
Speaker 1 (02:03):
Eric, I've read that you've lived and worked in more
than twenty countries, which is quite remarkable. Could you give
us a bit of background around how you became involved
with sustainability and sustainable finance.
Speaker 2 (02:14):
Sure, you're right, I have lived and worked in many places.
Most of my early career was in doing various parts
of what we would consider CFO function, But really I
started working in sustainability back in roughly twenty sixteen twenty seventeen,
when the Singapore Exchange required sustainability reporting from public listed
(02:36):
companies like you will Be, and I took it on
as kind of like an extra curricular activity on top
of my finance job to help the bank figure out
sustainability reporting. And it was actually in doing some of
that early work that really forged my view on the
fact that sustainability was in you know, just a cute
(02:58):
little CSI activity, wasn't about tree hugging, but it really
had a deep integration into what good businesses responsible capitalism
could look like. And that really kind of sparked my
interest in sustainability and sustainable finance itself. Back in twenty
twenty twenty twenty one, as sustainability became a big, mega
(03:20):
trend that everyone had to deal with, Coeo then decided
quite presciently that we needed a Chief Sustainability Officer and
he asked me to take on the role to help
the group figure out our sustainability strategy as well as
to execute to it together with our business partners and
across our geographical footprint.
Speaker 1 (03:40):
Very interesting, So, Eric, that was your one easy question
I'm going to move now to the big heavy questions.
We're winnessing a strong backlash to many things ESG in
key regions of the world, especially in the US and
parts of Europe, and many sustainability professionals are spoken to
find themselves caught in the middle, one thing to do
what they feel is right, but also uncertain about how
(04:01):
to proceed. So I'm curious what is your view on
how companies pursuing sustainability initiatives should think about the future.
Speaker 2 (04:09):
Yeah, it's an interesting time we sit in right now
with the number one politicization of the topic of ESG
or sustainability largely coming out from the West. But also
I think there's a huge pivotal point here where we
can project sustainability in a much more mature and effective
manner into the future. Now, what I mean by this
(04:32):
is in the twenty to twenty two timeframe, what I
consider a bit of that peak ESG times, there was
a lot of idealism, a lot of jumping on the
bandwagon or was the next big mega trend was fueling
a lot of big commitments, a lot of action, and
I think for the early part of that journey that
(04:54):
idealism and passion is absolutely required and was very very good.
Now we live in the real world and it's very
important to understand that we need to deliver sustainability, not
simply talk about it or be passionate about it. And
this is where I think, with a lot of the
anti sustainability or ANTEESG sentiment going on right now, we
(05:17):
need to be able to separate what works in sustainability
versus what perhaps needs to be relooked at. And clearly
what works is hardcore green industrial policy as well as
low carbon technologies that are mature and can be scaled
for impact, and that's the stuff we need to continue
(05:39):
to lean into with the real economy companies to help finance,
to help implement. And then there are areas within sustainability
that we also need to take a hard look at
and figure out whether these truly truly can create the
scaled impact that they will promise perhaps a couple of
(05:59):
years ago, and figure out whether we continue to put
our energies and finances behind some of these technologies. So
I don't think it's necessarily a bad thing that sustainability
now needs to go into the hardcore assessment of what
really works what can really scale what's commercially viable?
Speaker 1 (06:17):
Right, that's great, Thanks so much, Eric, I'd like to
build on that. So clearly you have relationships with many
companies as well as individuals across different industries throughout the region.
What do you see as the role of a bank
in driving sustainable practices across the different customer segments and
industries that you do business with? And then how do
(06:38):
you balance that with the need to earn a risk
adjusted return from your financing activities.
Speaker 2 (06:44):
Yeah, that's a great question. So right at the beginning
of our sustainability journey, one of the things we wanted
to ensure was that sustainability was authentic and integral to
our business strategy and in fact our entire existence as
a bank. Right, and so let me bring you back
to how we think of what a bank does, or
(07:06):
at least how YOB thinks about it. We are responsible
for supporting the development of the economies in which we bank,
and like you mentioned, Conrad Or a Singapore based bank
with a huge presence across Southeast Asia, Malaysia, Thailand, Indonesia
and Vietnam, and of course we have an extensive network
(07:27):
across many other countries. Through a branch network as well.
So when we think of that role of a bank
as supporting the economic development of the jurisdictions in which
we operate, when we infuse sustainability into the conversation, it's
about supporting the sustainable development of these economies. And so
what do we mean by that when we look at
(07:49):
the economies of each of these countries, be it from
how they generate power and electricity, to how they grow
their foods, to how they build the cities, to how
they trans support goods and services and even people. That's
what makes a country or a city or an economy
works right, And so when we think about sustainable finance
(08:11):
from our perspective, it's about building the right kind of
sustainable finance capabilities to be able to support our clients
as they transition their business models in whatever sector they
may be, in whatever country we may support, to go
from what we'll consider perhaps an older model of high
carbon intensive business models towards new tech, low carbon, more
(08:36):
future ready type business models. And so that's kind of
how we think about using our balance sheet together with
supporting a client transition journey to create that positive skilled
impact in the economies in which we operate.
Speaker 1 (08:51):
Building on that, I'd like to explore the idea of
a just transition. So the idea that transforming how economic
activities performed on a planet wide scale in order to
reduce emissions and preserve the environment, must also be fair
to the people who currently make a living from the
industries that are most affected, whether it's coal mining or
(09:11):
agriculture or steel and cement production. How do you think
about the just transition in the context of driving positive
impact in the region.
Speaker 2 (09:21):
Yeah, so if you think about our region of Asian
there is huge growth potential here that we all recognize
can continue to uplive employment standards, living standards, upward social mobility,
and these are quite fundamental rights that we need to
(09:43):
be a bit support, not deny, our populations within the region.
So when we think about a just transition, it's about
how do we thread the needle on being high ambition
in terms of decarbonizing our economic model as well as
protecting our natural ecosystems, but still being able to deliver
(10:06):
high level of employment, energy affordability, as well as support
the like I mentioned upward social mobility of hundreds of
millions of people and a big part of this therefore
is being able to support companies in a way where
it's high ambition but it's commercially viable, because if we
(10:29):
go down the path of hunting business models that are
not commercially viable in the long run, that's not going
to help anyone. And if we engage with national ecosystems,
for example, and energy transition in a way that makes
energy unaffordable or inaccessible, that's also not going to be
(10:51):
helpful for those economies in the long run. So I
think a lot of what we mean by it just
transition is understanding at what rate, at what pace, at
what levels of affordability, Thus that all capital stock get
recycled into new capital stock that's low carbon, and supporting
our clients and making those judgments and financing those transitions.
Speaker 1 (11:13):
I'm glad you touched on the topic of natural capital.
Southeast Asia in particular is exceptionally rich in biodiversity, but
just as elsewhere, natural capital often isn't properly factored into
financial capital allocation or investment decisions. Could you share about
how you think about biodiversity and natural capital in your
(11:34):
role as CSO and how you might look to integrate
that into your own decision making.
Speaker 2 (11:39):
Yeah, Conrad, that's an error been working on for the
last year or so. With the release of the TNFT,
which is the Task Force for Nature Related financial disclosures
quite a mouthful, we started to ADUOB take a look
at our own portfolio to try to understand where nature
and biodiversity had interactions with our financing portfolio, both from
(12:04):
a risk as well as opportunities perspective. So let me
share a couple of insights here. The first thing we
realized when we started on this nature and biodiversity journey
is most folks think of nature in a very simplistic way.
They think nature is about saving the panda bear, protecting
(12:25):
the polar bear, you know, planting a few more trees,
and maybe something about mangroves. Saying right, But really, if
we think about nature in the context of our economic models,
using some of the language from the TNFD, we're really
looking at the level of dependency our economic models have
(12:47):
on natural capital, and therefore thinking of nature within the
entire economic value chain, rather than treating it as a
separate resource but really an integrowing, critical part of how
we build about economic goods and services. So I'll give
you a class example, agriculture, everybody understands, right, So when
(13:10):
we talk about nature, we're talking about things like water,
we're talking about land use, we're talking about pollination capabilities
and services that nature provide for us, and everybody naturally understands.
With agriculture, you need a lot of nature to be
able to support growing up our crops. But if you
think about something like the built environment, most folks don't
(13:34):
naturally make that connection. But if you think about the
built environment, we need a lot of our building materials
from the natural environment. We still need a huge amount
of water as well as the impacts to the land
that we build upon. So being able to understand the
risks and dependencies our economic models and business models have
(13:57):
relying on natural capital and the fact that nature then
gives us regulating services like flood control or pest control
in order for us to be able to operate. This
is a different way of thinking about nature and as
much more integral way of thinking of how it connects
with the economic activity that we do. Now, the other
(14:18):
thing about nature is I think folks do it at
the service by thinking of it as a completely different
thing from climate. And so sometimes I hear folks say, oh,
we're still struggling to solve climate, so let's focus on
climate and we'll deal with nature later. But another insight
that we got as we did our work on nature
(14:38):
is what we call the climate nature nexus. And really,
at the end of the day, issues around climate and
issues around nature are heavily intertwined, and unless we're thinking
about these issues together as a whole, we might end
up solving one issue and creating an issue for something else. Right,
(14:58):
And so if you take something like the BCA Green
Mark standards that we use in Singapore to guide how
we build the built environment, what you begin to realize
is there are expectations there, for example, for energy efficiency,
so that's a very climate related type topic. But the
BCA Green Mark also as standards around water efficiency as
(15:21):
well as waste and pollution management, and therefore a set
of guidelines and regulations addressed for climate as well as
nature and biodiversity altogether. And I think that's how we
need to be thinking of nature and bio diversity, not
as some kind of conservation topic, but really as a
part of our economic value chains and how we manage
(15:43):
those resources as responsibly and sustainably as possible.
Speaker 1 (15:47):
That's fantastic. I'd like to shift perspectives a little now.
I'm curious, are there instances where your engagement with your
clients or business partners has shaped your own behavior, practices
or strategy and could you please share some of these
examples if you're willing, I.
Speaker 2 (16:05):
Would say one of the earliest examples of this. And
that's why I think as we work in sustainability, we
need to be quite humble and open minded about listening
to all of our stakeholders. I'm reminded of when we
were working on our net zero targets at that point
in time, when we looked at the market, we realized
(16:27):
that every global bank and even some regional banks were
setting net zero targets for the reduction of aill in
gas right And as we looked at some of those
net zero reference pathways for how oil and gas was
supposed to be reducing, one of the things we started
(16:49):
to realize was a lot of those reference pathways did
not consider the fact that if you reduce all and
gas at that pace without corresponding increase in alternate energy
sources as well as grit upgrades, that it was going
to likely cause economic damage to a lot of the
(17:12):
developing economies in which we finance and bank, and so
the oil and gas pathways that were available back then
did not ring true to us. It did not make sense.
We had really tough discussions internally with our bankers, with
our management, with our ecosystem clients, taking that feedback, and
(17:34):
we made what was very I will consider brave and
controversial decision at that point in time. We decided to
go to market with a set of net zero targets,
where for oil and gas we did not have a
reduction target similar to appears, but we set a sectoral
policy around no longer financing the opening up of new
(17:58):
oil and gas fields. Now, we didn't know how that
was going to be received, whether our stakeholders, our investors
would look at that and say we were low ambition,
but we made that call really through speaking with ecosystem partners, governments, clients,
(18:20):
discussing among ourselves, and that was actually quite a critical
part of how we thought about our ambition, combined with
just transition and a strategy around critical asset class which
I think the region really needs. So that's an example
of how I thought it was very important to continue
(18:42):
to be open minded to all voices in this journey.
Speaker 1 (18:48):
And looking back to when you began as cso, could
you share some of the early steps that you took
and also perhaps what's been most useful. What are some
things you wished you'd known or realized sooner? And also
how has your approach evolved?
Speaker 2 (19:05):
Since it's a really good question, I'll share with our
audience one thing that I think we realized and did
well from day one. We very quickly realized that sustainability
and the ability to scale impact was very much about
(19:26):
alignment across ecosystem partners. And when I say ecosystem partners,
I mean government and the regulations that they come up
with or policies, real economy companies and their ambitions in
terms of their transition journeys, and within the bank, the
ability to align how bored management, our business units, and
(19:49):
our countries thought about sustainability, and because we realized it
was heavily dependent on alignment, we spend a lot of
time internally figuring out what that alignment of sustainability into
bank strategy into business strategy needed to look like and
(20:13):
spending that time. Investing that time in alignment allowed us
to then run with quite a lot of pace after
everybody was bought in on that. So one of the
things I'm going to say is it's very important to
constantly figure out how to align, collaborate, and communicate when
(20:33):
we're on a sustainability journey and where we see blockages
in being able to scale impact is usually when you
find a part of the ecosystem isn't bought in, be
it a government policy, be it a real accounting company
that doesn't have the right technology to be able to
(20:56):
deploy it scale commercially yet, et cetera. Where we sense
that lack of alignment, it's important to figure out whether
you want to continue to spend your resources and time
and effort on an error that may be a dead
end or it's simply a block that you need to
(21:17):
be able to help influence through and kind of move
through that god or not right. And so I would
say for a lot of folks who are on the
sustainability journey, figure out that alignment with your key decision
makers and stakeholders. You have limited investment dollars and efforts
and organizational energy, so go for the ones that can
(21:40):
scale impact. Take a couple of early wins show that
sustainability can help your business strategy and kind of phase
in that journey from there. It's important not to get
stuck in techno speak because nobody understands that language, and
it's important to be able to kin't bring everyone along
on their journey.
Speaker 1 (22:02):
That's fascinating. I'm really glad that you brought up this
issue of alignment and how much time and effort you
and the rest of your team invested in this. I
think one key feature of Asia, and certainly Southeast Asia,
is that obviously were made up of many different countries,
each having its own political structure, regulatory framework, and development priorities,
(22:24):
and sometimes all of this within a single country. I'm
very curious to know what your view is on how
companies should think about the region and this sort of
uneven distribution of development priorities when they try to create
positive impact.
Speaker 2 (22:44):
Yeah. Our world region is highly, highly complex, right, so
when we say Southeast Asia, it's a convenient way of
saying we've got a bunch of countries that are at
very different points on the developmental journeys, like you mentioned,
but more importantly, with different cultures, decisioning frameworks, priorities, et
(23:05):
cetera et cetera. The way we addressed it at UOB
was we created our sustainability strategy, capabilities and product sets
at Group here in Singapore in as comprehensive and holistic
a manner as we knew how to, and we continue
(23:26):
to evolve and enhance that offering and that strategy. But
as we set up our sustainability teams in each of
our countries to work with their management as well as
their business units, what we told our subsidiaries was to
customize a lot of what we built at Group to
be most relevant to what our clients in each of
(23:49):
those countries needed. To work very closely with the regulators
and the governments in each of those countries on what
their priorities were to play supporting an influencing role so
that whatever impact we could scale today, we go for it,
and what impact or policies we could help shape for tomorrow.
(24:14):
We also did that as humbly as we could. It's
important not to get into a naggy mode, as I
will call it, right where a country or a group
of executives or politicians walk into another country and tell
them what they should do. We have very little appreciation
of the complexities of how other countries need to manage
(24:37):
their various priorities and complexities. So I think always with
a bit of a humble approach to understand what impact
we can create and to help shape these for tomorrow.
What we found is that's the best way to work
with the ecosystem and to be able to then be
(24:57):
a strategic partner for that ecosystem, be it at a
government level or at a business community level for the
medium and long term.
Speaker 1 (25:06):
Very insightful. What are some of the concerns or hurdles
that you see that you think might slow progress as
we look out from here to twenty thirty, which is
just five years from now.
Speaker 2 (25:19):
The reality is sustainability is a multi ecosystem player game,
and for us to be able to scale the impact
that we're looking for, be it by twenty thirty or
by twenty fifty, every ecosystem partner needs to be pulling
(25:40):
the lever available to them. And one of the levers
that I've realized is the most important to be able
to support and activate and accelerate action is government policy. Now,
if we look at a country like China, right, China
(26:01):
has been very clear in how it wants to build
its green industrial policy. It has the ability to sustain
that strategy over a period of time and to invest
into that strategy. And the China we see today obviously
is number one in solar panels, number one in evs,
(26:26):
number one in battery tech. Right, government policies are amazingly
important in being able to create the right conducive environment
for companies to invest and for banks to be able
to finance those investments. So one of the biggest challenges
(26:49):
that we continue to face is clarity, consistency, and conviction
around national industrial policies related to sustainability. Because the less
clarity there is, the higher risks some of these investments become,
and that retarts and accelerates implementation and action. So that's
(27:13):
one area we continue to struggle with and unfortunately just
got a bit worse I think in some parts of
the world.
Speaker 1 (27:21):
I certainly agree on the importance of government policy, And
if I could ask you to share some reasons for
optimism despite some of these big challenges that we see
going into the next five years.
Speaker 2 (27:37):
Or so, I would say I look forward to technology
as well as real economy companies leading the way. So
we have seen a lot of in recent times banks
kind of exiting the net zero banking alliance, and we
(27:58):
know a lot of that is to be able to
de risk what is now a highly legally dangerous environment
for them, particularly in the West. But if we look
at beyond these high level commitments and statements of ESG
commitments and go down to the business models itself, we
(28:23):
do see technologies that are becoming mature and commercially viable.
We mentioned briefly the green industrial capacity that China is
bringing to the world. They have massive capacity here at
very affordable rates for the developing parts of the world
to be able to implement a lot of these low
(28:45):
carbon technologies. And I think it is again making the
right business decisions to be able to replace old capital
stock with new capital stock that makes sense. That is
going to be driving sustainability forward. Now, what is going
(29:05):
to be key is to be able to continue the
R and D into the technologies we need for the future,
so around areas like aviation, long term transport, possibly hydrogen,
et cetera, et cetera. That R and D needs to
continue so that we continue to be able to access
(29:29):
low carbon new economy technologies and asset classes as commercially
viably as possible. I think that's the optimism that I
continue to bank on. Governments will change, politicians will change,
but technological progress, hopefully over time, will help us deliver
to the future we're all looking for.
Speaker 1 (29:50):
Thank you so much, Eric, that's a really hopeful note
that I think is a great note to end this
episode on. Thank you so much again for your time
and sharing your insights to all our listeners. I hope
you enjoyed my conversation with Eric as much as I have.
You can find out more information about how different companies
and industries globally are responding to ESG related risks and
(30:11):
opportunities by going to p I E s G go
on any Bloomberg terminal. If you have an e s
G quandary or burning question you would like to ask
pi's expert analysts, please send us an email at e
SG Currents at Bloomberg dot net. Thank you for tuning in,
and do join us again next time
ESG has become established as a key business theme as
companies and investors seek to navigate the climate crisis, energy transition,
social mega trends, mounting regulatory attention and pressure from other stakeholders.
The rapidly evolving landscape has become inundated with acronyms, buzzwords,
and lingo. We aim to break these down with industry experts.
(00:31):
Welcome to ESG Currents, your guide to navigating the evolving
ESG space, one topic at a time, Brought to you
by Bloomberg Intelligence, part of Bloomberg's research department with five
hundred analysts and strategists working across all major world markets.
I'm Conrad Dunn, ESG integration Analyst for APEC at Bloomberg Intelligence,
(00:51):
and I'm your host for today's episode. Today we're talking
about sustainable finance in Asia, the role of banks and
driving sustainable practices in different industries, How considerations such as
supporting a just transition and biodiversity protection influenced the strategy,
and what the backlash against ESG in key parts of
the world could mean for company's sustainability initiatives. Joining me
(01:14):
today is Eric Limb, Managing director and chief Sustainability Officer
of United Overseas Bank, widely known as UOB. UOB has
an extensive footprint across Asia and especially deep roots in
Southeast Asia. Eric has held many roles in banking and
finance for over two decades prior to becoming Chief Sustainability
(01:34):
Officer at UOB, giving him deep insight into the role
of global finance in driving sustainability outcomes and also how
they are influenced by shifts in jee politics, investor sentiment,
and social norms. To set the scene for our listeners,
Eric and I are sitting in a studio at a
Bloomberg office in Singapore, a short walk from uob's global headquarters,
(01:55):
and it's a nice school day outdoors. Eric, really delighted to.
Speaker 2 (01:59):
Have you with us. Modern Conrad, thanks for having me now.
Speaker 1 (02:03):
Eric, I've read that you've lived and worked in more
than twenty countries, which is quite remarkable. Could you give
us a bit of background around how you became involved
with sustainability and sustainable finance.
Speaker 2 (02:14):
Sure, you're right, I have lived and worked in many places.
Most of my early career was in doing various parts
of what we would consider CFO function, But really I
started working in sustainability back in roughly twenty sixteen twenty seventeen,
when the Singapore Exchange required sustainability reporting from public listed
(02:36):
companies like you will Be, and I took it on
as kind of like an extra curricular activity on top
of my finance job to help the bank figure out
sustainability reporting. And it was actually in doing some of
that early work that really forged my view on the
fact that sustainability was in you know, just a cute
(02:58):
little CSI activity, wasn't about tree hugging, but it really
had a deep integration into what good businesses responsible capitalism
could look like. And that really kind of sparked my
interest in sustainability and sustainable finance itself. Back in twenty
twenty twenty twenty one, as sustainability became a big, mega
(03:20):
trend that everyone had to deal with, Coeo then decided
quite presciently that we needed a Chief Sustainability Officer and
he asked me to take on the role to help
the group figure out our sustainability strategy as well as
to execute to it together with our business partners and
across our geographical footprint.
Speaker 1 (03:40):
Very interesting, So, Eric, that was your one easy question
I'm going to move now to the big heavy questions.
We're winnessing a strong backlash to many things ESG in
key regions of the world, especially in the US and
parts of Europe, and many sustainability professionals are spoken to
find themselves caught in the middle, one thing to do
what they feel is right, but also uncertain about how
(04:01):
to proceed. So I'm curious what is your view on
how companies pursuing sustainability initiatives should think about the future.
Speaker 2 (04:09):
Yeah, it's an interesting time we sit in right now
with the number one politicization of the topic of ESG
or sustainability largely coming out from the West. But also
I think there's a huge pivotal point here where we
can project sustainability in a much more mature and effective
manner into the future. Now, what I mean by this
(04:32):
is in the twenty to twenty two timeframe, what I
consider a bit of that peak ESG times, there was
a lot of idealism, a lot of jumping on the
bandwagon or was the next big mega trend was fueling
a lot of big commitments, a lot of action, and
I think for the early part of that journey that
(04:54):
idealism and passion is absolutely required and was very very good.
Now we live in the real world and it's very
important to understand that we need to deliver sustainability, not
simply talk about it or be passionate about it. And
this is where I think, with a lot of the
anti sustainability or ANTEESG sentiment going on right now, we
(05:17):
need to be able to separate what works in sustainability
versus what perhaps needs to be relooked at. And clearly
what works is hardcore green industrial policy as well as
low carbon technologies that are mature and can be scaled
for impact, and that's the stuff we need to continue
(05:39):
to lean into with the real economy companies to help finance,
to help implement. And then there are areas within sustainability
that we also need to take a hard look at
and figure out whether these truly truly can create the
scaled impact that they will promise perhaps a couple of
(05:59):
years ago, and figure out whether we continue to put
our energies and finances behind some of these technologies. So
I don't think it's necessarily a bad thing that sustainability
now needs to go into the hardcore assessment of what
really works what can really scale what's commercially viable?
Speaker 1 (06:17):
Right, that's great, Thanks so much, Eric, I'd like to
build on that. So clearly you have relationships with many
companies as well as individuals across different industries throughout the region.
What do you see as the role of a bank
in driving sustainable practices across the different customer segments and
industries that you do business with? And then how do
(06:38):
you balance that with the need to earn a risk
adjusted return from your financing activities.
Speaker 2 (06:44):
Yeah, that's a great question. So right at the beginning
of our sustainability journey, one of the things we wanted
to ensure was that sustainability was authentic and integral to
our business strategy and in fact our entire existence as
a bank. Right, and so let me bring you back
to how we think of what a bank does, or
(07:06):
at least how YOB thinks about it. We are responsible
for supporting the development of the economies in which we bank,
and like you mentioned, Conrad Or a Singapore based bank
with a huge presence across Southeast Asia, Malaysia, Thailand, Indonesia
and Vietnam, and of course we have an extensive network
(07:27):
across many other countries. Through a branch network as well.
So when we think of that role of a bank
as supporting the economic development of the jurisdictions in which
we operate, when we infuse sustainability into the conversation, it's
about supporting the sustainable development of these economies. And so
what do we mean by that when we look at
(07:49):
the economies of each of these countries, be it from
how they generate power and electricity, to how they grow
their foods, to how they build the cities, to how
they trans support goods and services and even people. That's
what makes a country or a city or an economy
works right, And so when we think about sustainable finance
(08:11):
from our perspective, it's about building the right kind of
sustainable finance capabilities to be able to support our clients
as they transition their business models in whatever sector they
may be, in whatever country we may support, to go
from what we'll consider perhaps an older model of high
carbon intensive business models towards new tech, low carbon, more
(08:36):
future ready type business models. And so that's kind of
how we think about using our balance sheet together with
supporting a client transition journey to create that positive skilled
impact in the economies in which we operate.
Speaker 1 (08:51):
Building on that, I'd like to explore the idea of
a just transition. So the idea that transforming how economic
activities performed on a planet wide scale in order to
reduce emissions and preserve the environment, must also be fair
to the people who currently make a living from the
industries that are most affected, whether it's coal mining or
(09:11):
agriculture or steel and cement production. How do you think
about the just transition in the context of driving positive
impact in the region.
Speaker 2 (09:21):
Yeah, so if you think about our region of Asian
there is huge growth potential here that we all recognize
can continue to uplive employment standards, living standards, upward social mobility,
and these are quite fundamental rights that we need to
(09:43):
be a bit support, not deny, our populations within the region.
So when we think about a just transition, it's about
how do we thread the needle on being high ambition
in terms of decarbonizing our economic model as well as
protecting our natural ecosystems, but still being able to deliver
(10:06):
high level of employment, energy affordability, as well as support
the like I mentioned upward social mobility of hundreds of
millions of people and a big part of this therefore
is being able to support companies in a way where
it's high ambition but it's commercially viable, because if we
(10:29):
go down the path of hunting business models that are
not commercially viable in the long run, that's not going
to help anyone. And if we engage with national ecosystems,
for example, and energy transition in a way that makes
energy unaffordable or inaccessible, that's also not going to be
(10:51):
helpful for those economies in the long run. So I
think a lot of what we mean by it just
transition is understanding at what rate, at what pace, at
what levels of affordability, Thus that all capital stock get
recycled into new capital stock that's low carbon, and supporting
our clients and making those judgments and financing those transitions.
Speaker 1 (11:13):
I'm glad you touched on the topic of natural capital.
Southeast Asia in particular is exceptionally rich in biodiversity, but
just as elsewhere, natural capital often isn't properly factored into
financial capital allocation or investment decisions. Could you share about
how you think about biodiversity and natural capital in your
(11:34):
role as CSO and how you might look to integrate
that into your own decision making.
Speaker 2 (11:39):
Yeah, Conrad, that's an error been working on for the
last year or so. With the release of the TNFT,
which is the Task Force for Nature Related financial disclosures
quite a mouthful, we started to ADUOB take a look
at our own portfolio to try to understand where nature
and biodiversity had interactions with our financing portfolio, both from
(12:04):
a risk as well as opportunities perspective. So let me
share a couple of insights here. The first thing we
realized when we started on this nature and biodiversity journey
is most folks think of nature in a very simplistic way.
They think nature is about saving the panda bear, protecting
(12:25):
the polar bear, you know, planting a few more trees,
and maybe something about mangroves. Saying right, But really, if
we think about nature in the context of our economic models,
using some of the language from the TNFD, we're really
looking at the level of dependency our economic models have
(12:47):
on natural capital, and therefore thinking of nature within the
entire economic value chain, rather than treating it as a
separate resource but really an integrowing, critical part of how
we build about economic goods and services. So I'll give
you a class example, agriculture, everybody understands, right, So when
(13:10):
we talk about nature, we're talking about things like water,
we're talking about land use, we're talking about pollination capabilities
and services that nature provide for us, and everybody naturally understands.
With agriculture, you need a lot of nature to be
able to support growing up our crops. But if you
think about something like the built environment, most folks don't
(13:34):
naturally make that connection. But if you think about the
built environment, we need a lot of our building materials
from the natural environment. We still need a huge amount
of water as well as the impacts to the land
that we build upon. So being able to understand the
risks and dependencies our economic models and business models have
(13:57):
relying on natural capital and the fact that nature then
gives us regulating services like flood control or pest control
in order for us to be able to operate. This
is a different way of thinking about nature and as
much more integral way of thinking of how it connects
with the economic activity that we do. Now, the other
(14:18):
thing about nature is I think folks do it at
the service by thinking of it as a completely different
thing from climate. And so sometimes I hear folks say, oh,
we're still struggling to solve climate, so let's focus on
climate and we'll deal with nature later. But another insight
that we got as we did our work on nature
(14:38):
is what we call the climate nature nexus. And really,
at the end of the day, issues around climate and
issues around nature are heavily intertwined, and unless we're thinking
about these issues together as a whole, we might end
up solving one issue and creating an issue for something else. Right,
(14:58):
And so if you take something like the BCA Green
Mark standards that we use in Singapore to guide how
we build the built environment, what you begin to realize
is there are expectations there, for example, for energy efficiency,
so that's a very climate related type topic. But the
BCA Green Mark also as standards around water efficiency as
(15:21):
well as waste and pollution management, and therefore a set
of guidelines and regulations addressed for climate as well as
nature and biodiversity altogether. And I think that's how we
need to be thinking of nature and bio diversity, not
as some kind of conservation topic, but really as a
part of our economic value chains and how we manage
(15:43):
those resources as responsibly and sustainably as possible.
Speaker 1 (15:47):
That's fantastic. I'd like to shift perspectives a little now.
I'm curious, are there instances where your engagement with your
clients or business partners has shaped your own behavior, practices
or strategy and could you please share some of these
examples if you're willing, I.
Speaker 2 (16:05):
Would say one of the earliest examples of this. And
that's why I think as we work in sustainability, we
need to be quite humble and open minded about listening
to all of our stakeholders. I'm reminded of when we
were working on our net zero targets at that point
in time, when we looked at the market, we realized
(16:27):
that every global bank and even some regional banks were
setting net zero targets for the reduction of aill in
gas right And as we looked at some of those
net zero reference pathways for how oil and gas was
supposed to be reducing, one of the things we started
(16:49):
to realize was a lot of those reference pathways did
not consider the fact that if you reduce all and
gas at that pace without corresponding increase in alternate energy
sources as well as grit upgrades, that it was going
to likely cause economic damage to a lot of the
(17:12):
developing economies in which we finance and bank, and so
the oil and gas pathways that were available back then
did not ring true to us. It did not make sense.
We had really tough discussions internally with our bankers, with
our management, with our ecosystem clients, taking that feedback, and
(17:34):
we made what was very I will consider brave and
controversial decision at that point in time. We decided to
go to market with a set of net zero targets,
where for oil and gas we did not have a
reduction target similar to appears, but we set a sectoral
policy around no longer financing the opening up of new
(17:58):
oil and gas fields. Now, we didn't know how that
was going to be received, whether our stakeholders, our investors
would look at that and say we were low ambition,
but we made that call really through speaking with ecosystem partners, governments, clients,
(18:20):
discussing among ourselves, and that was actually quite a critical
part of how we thought about our ambition, combined with
just transition and a strategy around critical asset class which
I think the region really needs. So that's an example
of how I thought it was very important to continue
(18:42):
to be open minded to all voices in this journey.
Speaker 1 (18:48):
And looking back to when you began as cso, could
you share some of the early steps that you took
and also perhaps what's been most useful. What are some
things you wished you'd known or realized sooner? And also
how has your approach evolved?
Speaker 2 (19:05):
Since it's a really good question, I'll share with our
audience one thing that I think we realized and did
well from day one. We very quickly realized that sustainability
and the ability to scale impact was very much about
(19:26):
alignment across ecosystem partners. And when I say ecosystem partners,
I mean government and the regulations that they come up
with or policies, real economy companies and their ambitions in
terms of their transition journeys, and within the bank, the
ability to align how bored management, our business units, and
(19:49):
our countries thought about sustainability, and because we realized it
was heavily dependent on alignment, we spend a lot of
time internally figuring out what that alignment of sustainability into
bank strategy into business strategy needed to look like and
(20:13):
spending that time. Investing that time in alignment allowed us
to then run with quite a lot of pace after
everybody was bought in on that. So one of the
things I'm going to say is it's very important to
constantly figure out how to align, collaborate, and communicate when
(20:33):
we're on a sustainability journey and where we see blockages
in being able to scale impact is usually when you
find a part of the ecosystem isn't bought in, be
it a government policy, be it a real accounting company
that doesn't have the right technology to be able to
(20:56):
deploy it scale commercially yet, et cetera. Where we sense
that lack of alignment, it's important to figure out whether
you want to continue to spend your resources and time
and effort on an error that may be a dead
end or it's simply a block that you need to
(21:17):
be able to help influence through and kind of move
through that god or not right. And so I would
say for a lot of folks who are on the
sustainability journey, figure out that alignment with your key decision
makers and stakeholders. You have limited investment dollars and efforts
and organizational energy, so go for the ones that can
(21:40):
scale impact. Take a couple of early wins show that
sustainability can help your business strategy and kind of phase
in that journey from there. It's important not to get
stuck in techno speak because nobody understands that language, and
it's important to be able to kin't bring everyone along
on their journey.
Speaker 1 (22:02):
That's fascinating. I'm really glad that you brought up this
issue of alignment and how much time and effort you
and the rest of your team invested in this. I
think one key feature of Asia, and certainly Southeast Asia,
is that obviously were made up of many different countries,
each having its own political structure, regulatory framework, and development priorities,
(22:24):
and sometimes all of this within a single country. I'm
very curious to know what your view is on how
companies should think about the region and this sort of
uneven distribution of development priorities when they try to create
positive impact.
Speaker 2 (22:44):
Yeah. Our world region is highly, highly complex, right, so
when we say Southeast Asia, it's a convenient way of
saying we've got a bunch of countries that are at
very different points on the developmental journeys, like you mentioned,
but more importantly, with different cultures, decisioning frameworks, priorities, et
(23:05):
cetera et cetera. The way we addressed it at UOB
was we created our sustainability strategy, capabilities and product sets
at Group here in Singapore in as comprehensive and holistic
a manner as we knew how to, and we continue
(23:26):
to evolve and enhance that offering and that strategy. But
as we set up our sustainability teams in each of
our countries to work with their management as well as
their business units, what we told our subsidiaries was to
customize a lot of what we built at Group to
be most relevant to what our clients in each of
(23:49):
those countries needed. To work very closely with the regulators
and the governments in each of those countries on what
their priorities were to play supporting an influencing role so
that whatever impact we could scale today, we go for it,
and what impact or policies we could help shape for tomorrow.
(24:14):
We also did that as humbly as we could. It's
important not to get into a naggy mode, as I
will call it, right where a country or a group
of executives or politicians walk into another country and tell
them what they should do. We have very little appreciation
of the complexities of how other countries need to manage
(24:37):
their various priorities and complexities. So I think always with
a bit of a humble approach to understand what impact
we can create and to help shape these for tomorrow.
What we found is that's the best way to work
with the ecosystem and to be able to then be
(24:57):
a strategic partner for that ecosystem, be it at a
government level or at a business community level for the
medium and long term.
Speaker 1 (25:06):
Very insightful. What are some of the concerns or hurdles
that you see that you think might slow progress as
we look out from here to twenty thirty, which is
just five years from now.
Speaker 2 (25:19):
The reality is sustainability is a multi ecosystem player game,
and for us to be able to scale the impact
that we're looking for, be it by twenty thirty or
by twenty fifty, every ecosystem partner needs to be pulling
(25:40):
the lever available to them. And one of the levers
that I've realized is the most important to be able
to support and activate and accelerate action is government policy. Now,
if we look at a country like China, right, China
(26:01):
has been very clear in how it wants to build
its green industrial policy. It has the ability to sustain
that strategy over a period of time and to invest
into that strategy. And the China we see today obviously
is number one in solar panels, number one in evs,
(26:26):
number one in battery tech. Right, government policies are amazingly
important in being able to create the right conducive environment
for companies to invest and for banks to be able
to finance those investments. So one of the biggest challenges
(26:49):
that we continue to face is clarity, consistency, and conviction
around national industrial policies related to sustainability. Because the less
clarity there is, the higher risks some of these investments become,
and that retarts and accelerates implementation and action. So that's
(27:13):
one area we continue to struggle with and unfortunately just
got a bit worse I think in some parts of
the world.
Speaker 1 (27:21):
I certainly agree on the importance of government policy, And
if I could ask you to share some reasons for
optimism despite some of these big challenges that we see
going into the next five years.
Speaker 2 (27:37):
Or so, I would say I look forward to technology
as well as real economy companies leading the way. So
we have seen a lot of in recent times banks
kind of exiting the net zero banking alliance, and we
(27:58):
know a lot of that is to be able to
de risk what is now a highly legally dangerous environment
for them, particularly in the West. But if we look
at beyond these high level commitments and statements of ESG
commitments and go down to the business models itself, we
(28:23):
do see technologies that are becoming mature and commercially viable.
We mentioned briefly the green industrial capacity that China is
bringing to the world. They have massive capacity here at
very affordable rates for the developing parts of the world
to be able to implement a lot of these low
(28:45):
carbon technologies. And I think it is again making the
right business decisions to be able to replace old capital
stock with new capital stock that makes sense. That is
going to be driving sustainability forward. Now, what is going
(29:05):
to be key is to be able to continue the
R and D into the technologies we need for the future,
so around areas like aviation, long term transport, possibly hydrogen,
et cetera, et cetera. That R and D needs to
continue so that we continue to be able to access
(29:29):
low carbon new economy technologies and asset classes as commercially
viably as possible. I think that's the optimism that I
continue to bank on. Governments will change, politicians will change,
but technological progress, hopefully over time, will help us deliver
to the future we're all looking for.
Speaker 1 (29:50):
Thank you so much, Eric, that's a really hopeful note
that I think is a great note to end this
episode on. Thank you so much again for your time
and sharing your insights to all our listeners. I hope
you enjoyed my conversation with Eric as much as I have.
You can find out more information about how different companies
and industries globally are responding to ESG related risks and
(30:11):
opportunities by going to p I E s G go
on any Bloomberg terminal. If you have an e s
G quandary or burning question you would like to ask
pi's expert analysts, please send us an email at e
SG Currents at Bloomberg dot net. Thank you for tuning in,
and do join us again next time
Host
Eric Kane
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