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BNP PARIBASSUSTAINABLE FUTURE FORUM“Investing for tomorrow’s success”

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ERIC RAYNAUDMEMBER OF THE GROUP EXECUTIVE

COMMITTEE, CEO ASIA PACIFIC, BNP PARIBAS.

In the 12 months since our inaugural forum in 2016, we have seen momentum swell behind green finance and an even greater need for urgent action on sustainability. This has occurred despite the US elections and subsequent political about-face on climate change, which threatened to cast a major shadow over the Paris agreement and the required climate action we had so rigorously debated.

I say “threatened” because, outside of the political realm, US corporate and institutional investor support for climate action remains just as strong. Why? Because there is no longer any debating that sustainability makes good business sense. It delivers benefits to communities, to shareholders, to governments and to the companies that make it their priority.

It has also been extremely pleasing from our position here in Asia Pacific to see the emergence of China as a leader on the subject of green finance. This year our Sustainable Future Forum examined how China is factoring sustainability into its future development plans. As seen across the Asia Pacific region, there is a firm acknowledgement that there can be no successful urbanization without strict adherence to the principals of sustainable development. And there is no doubt that China is moving to a leadership position on green finance and that it is fully committed to improving transparency around environmental, societal and governance performance within its corporations.

At BNP Paribas we are pleased to play a role in the Green Finance Taskforce and to contribute our expertise. We recognise that we can work alongside policymakers to create opportunities for business throughout Asia Pacific that effect development at all levels of society. As a bank, we have an important role to play in the transition to a more sustainable future and in realizing these opportunities alongside our clients, as well as the communities in which we operate.

We sit at the heart of the economy, channeling capital between those who need it – companies and projects – and those who have it and are seeking a financial return, the investment community. We must enable sustainable development by fostering the right investment decisions, a principle that guides our purpose.

There is no longer room for debate about “why” – we must move to the “how”.

O P E N I N G R E M A R K S

SUSTAINABLE FUTURE FORUM ASIA 2017(click here)

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T H E M E S

BNP PARIBAS SUSTAINABLE FUTURE FORUM

Ajay Dua - AVIVA India Life Insurance CompanyAlex Ng - BNP Paribas Asset ManagementAmine Bel Hadj Soulami - BNP ParibasAngelina Kwan - Hong Kong Exchanges and Clearing LimitedArnaud Tellier - BNP Paribas Wealth ManagementCynthia Tchikoltsoff - BNP ParibasDatuk Dr Mohammad Daud Bakar - Shariah Board BNP Paribas (Najmah)Didier Sire - World Energy CouncilEila Kreivi - European Investment BankElodie Feller - UNEP Finance InitiativeEmily Chew - Manulife Asset ManagementEric Raynaud - BNP ParibasErik Solheim - United Nations Environment ProgrammeFelipe Gordillo - BNP Paribas Asset ManagementFlora Chao - International Finance CorporationFrancis Ngai - Social Ventures Hong KongGabriel Schulze - Schulze Global InvestmentsGregory Schneider-Maunoury - HumanisHelena Vines Fiestas - BNP Paribas Asset ManagementIan Woods - AMP CapitalJason Mitchell - MAN GroupJayaroopa Jeyabarathi - Patamar CapitalJennifer Westacott - Business Council of AustraliaJohn Wood - Room to ReadJovilyn Cotio - Asian Development BankKevin Franklin - ELEVATEKim Clijsters - WTA Tennis LegendKim Yin Wong - Singapore PowerMa Jun - Green Finance Committee of China Society for Finance and BankingMadhu Gayer - BNP ParibasMartina Navratilova - WTA Tennis LegendMary Leung - CFA InstituteNaissa Bauerle - Lafarge HolcimPavan Sukhdev - GIST Advisory; United Nations Goodwill AmbassadorPhilippe Joubert - World Energy CouncilPierre Rousseau - BNP ParibasRay Tay - Moody’s Investors ServiceRizal Mohamed Ali - KWAPRoyston Braganza - Grameen Capital IndiaStephanie Sfakianos - BNP ParibasSunny Verghese - OlamTalieh Williams - UniSuperTim Nelson - AGL EnergyTony Simons - World Agroforestry CentreYoram Layani - BNP Paribas

SPEAKERS1 2

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THE FORUM MARTINA NAVRATILOVA

ERIK SOLHEIM EXECUTIVE LEADERS DEBATE

SUSTAINABLE FINANCE SHIFTS EAST

IMPACT INVESTING

GENDER EQUALITY

ESG

GREEN CHINA

GREEN FINANCE

SOLVING THE BLACK HOLE

ENERGY TRANSITION

Keynote speakers Creating business success through gender equality

Are we on track? Does sustainability drive profitability?

What are the implications for investment in Asia Pacific?

Driving sustainable economic growthwhile de-risking existing capacity

Myths and realities

Helping companies incentivise better ESG performance in their

supply chain

In conversation with Kim Clijsters

Sustainability & governance in the boardroom

ESG performance data

Opportunities and challenges in linking capital markets to sustained

economic growth

#BNPPSFF IN NUMBERS(click here)

T H E F O R U M

MARTINA NAVRATILOVA

ERIC RAYNAUD

ERIK SOLHEIM

WTA Tennis Legend

Member of the Group Executive Committee, CEO Asia Pacific, BNP Paribas

Executive Director, United Nations Environment

Programme

KEYNOTE SPEAKERS

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2017 SUSTAINABLE FUTURE FORUM IN SINGAPORE

#BNPPSFF(click here)

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K E Y N O T E

MARTINA NAVRATILOVACreating business success

through gender equality.

WTA TENNIS LEGEND

Martina Navratilova kicked off the conference on a strong note about gender equality. Growing up behind the Iron Curtain, in Czechoslovakia, female athletes were treated as equal to men. But this was not the case in the U.S., where Navratilova became a citizen in 1975.

• Achieving diversity isn’t easy initially. It can cause discomfort, lack of trust, perceived conflicts, communication issues among people. However, there is no shortage of studies that link gender diversity to better financial results.

• Massachusetts Institute of Technology showed that a diverse workforce increases revenue by over 40 percent. Diversity produces a cross pollination of ideas, attitudes, ways of thinking that inspire creativity, productivity, among all employees at all levels.

• Change requires a vision, and the first step towards making a personal or business goal come true is simply by articulating that vision. • Customers want companies that understand them, they want companies that communicate with them, they want companies with a workforce that represents all of them. • Navratilova cited the “Be-Do-Have” principle. “Be” yourself and “Do” the right thing will lead to “Have,” which is synonymous with reaching your goals.

“Sometimes you have to fight long, sometimes you have to fight hard—but eventually you’ll get there. But the fight still goes on today.”

“Companies cannot ignore 50 percent of the potential global workforce.”

The WTA tennis legend said the fight for gender equality exists well beyond sport. While the world still has some way to go before men and women reach parity in wages, the campaign for change is worthy because the benefits are manifold. As much as $12 trillion could be added to global GDP in the next eight years, sim-ply by advancing women’s equality.

K E Y TA K E - A W AY S

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K E Y N O T E

ERIK SOLHEIM

Agenda 2030 and the sustainability development goals: Are we on track?

EXECUTIVE DIRECTOR, UNITED NATIONS ENVIRONMENT PROGRAMME (UNEP)

“The challenge now is to bring environment and development into one flow, one stream and one vision for humanity. We cannot allow anyone to be outside of the society or to remain poor.

Everyone must have education and health and at the same time we have to take care of the environment. The good news is it has never been as easy as today.”

“What is important is where you put your big money. Not easy but we can jointly find the platform and the instrument for really making sure that the big money is purpose driven into transforming the world we want to see.”

K E Y TA K E - A W AY SErik Solheim, UNEP Executive Director, summed up the 17 Sustainability Development Goals (SDGs), 169 targets and 230 indicators in two words: people and planet. The goals relating to “people” include eradicating poverty, providing education and health, and life-saving support, while those for “planet” centre on taking care of the earth’s resources.

While there has been some progress regarding the SDGs, more could be done. Global health has seen vast improvements, with the world’s average life expectancy now 71 years old, compared with 46 in the 1950s, however, progress in education has been slow. With regards to climate action, Mr. Solheim said that U.S.

President Trump’s decision to withdraw from COP21 has had little impact given big American corporates, such as Apple and Google, as well as other nations have stepped up to fill the gap.

• Governments need good leadership, a strong functioning state, a vibrant private sector and a focus on education to achieve success in the SDGs. Governments do not need to become rich before embarking on polices to protect the environment.

• The UN has renewed its emphasis on partnering with responsible businesses to deliver sustainable development. The UN is keen to provide the platform and the support to the private sector, and to engage businesses’ creativity and innovation towards solving sustainable development challenges. • Banks should restore purpose-driven banking. The financial and banking sector has too many instruments, which are not purpose driven. Banking solutions, especially “big money” should be aimed at delivering positive impacts on society.

• Business and governments should work together to find ways to exit the most negative and the most risky investments. For example, insurance companies should refuse to cover companies that are engaged in Illegal and illicit fishing.

• Businesses and government institutions should have a constant dialogue on how to regulate markets. Businesses should help government establish the right policies to deliver sustainable development solutions.

TOP TIPS FOR A GREENER PLANET - #BNPPSFF (click here)

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EXECUTIVE LEADERS DEBATEDoes sustainability drive profitability?

MODERATORJohn Wood | Founder & CEO, Room to Read

PANELISTS Sunny Verghese | CEO, OLAM International

Kim Yin Wong | CEO, Singapore PowerEric Raynaud | CEO Asia Pacific, BNP Paribas

Pavan Sukhdev | GIST Advisory

E X E C U T I V E L E A D E R S D E B AT E

WHO IS YOUR SUSTAINABILITY IDOL? - #BNPPSFF (click here)

By 2050, there will be an estimated 9.5 billion people in the world, and it will become a challenge to support food production and maintain a high quality of life while staying within the nine planetary boundaries. The panel agreed that technological innovation will eventually deliver solutions that are not only good for sustainability but also business. A key point made was that every company should be measuring and reporting full performance, which includes human, social and physical capital, not just profit and loss.

• Companies with sustainability goals make difficult short-term adjustment. For instance, BNP Paribas’ decision to stop financing coal companies and not to work with oil and natural gas entities that primarily do business in shale or oil sands led to lost rev-enues. But the bank has won more than 20 renewable deals in recent years.

• Business with a sustainability missions engage and inspire employees, which in turn improves productivity. OLAM’s experience is that an engaged employee improves productivity by 75 percent. With an inspired employee, productivity rises an additional 25 percent.

“We do not aspire to be the biggest solar farm operator or the biggest wind farm, but we aspire to provide solutions that will cut consumers’ costs and at the same time deliver sustainable solutions to an urban high-density environment like Singapore.”

- Kim Yin Wong, CEOSingapore Power

“You can maximise both profits and purpose at the same time and that’s our goal to be both value maximisers in the economics sense but also purpose maximisers.”

- Sunny Verghese, CEO OLAM International.

“Private business will find its way, in addition to policies, to deliver sustainable solutions because it is better for business. The purpose and profitability pie will grow bigger, it will take on momentum and grow exponentially.”

- Kim Yin Wong, CEO Singapore Power.

“We told our team that we can’t say in public that we’re so committed to sustainability, and then continue to operate in ways that harm the planet.  We have hired great people, and I tell them:  Go find business for us in solar, go find opportunities in renewables.  And while these adjustments are never easy, they have done just that.”

- Eric Raynaud, CEO Asia Pacific, BNP Paribas

K E Y TA K E - A W AY S

E X E C U T I V E L E A D E R S D E B AT E

which supplies 70 percent of Mcdonald’s onions, managed to increase water efficiency by 22 percent, which helped to save the company millions of dollars.

• OLAM will be launching Olam insights in the first quarter of next year, which will provide customers with data such as the carbon and water footprint, the number of women farmers involved, how the company improves the livelihood of farmers etc.

• While transparency isn’t easy, particularly with negative data, OLAM’s board decided that disclosure is the right thing to do and such rules are likely to be mandatory in the near future.

• OLAM’s restructure to focus on changing agriculture and growing its business responsibly led the company to maximise crop per drop of water. With sensors attached to its crop, OLAM,

• Singapore Power’s business faces disruptions that threatens its existence. These disruptions include the rapid use of renewables and innovations in power storage. However, the company’s decided that driving value for customers, by helping to bring down the cost of energy usage, ensures that the company stays in business for longer.

• Singapore Power’s District Cooling system, a network of underground water pipes, supplies air conditioning to Marina Bay, and has helped customers by cutting energy costs by 40 percent.

YOUR “GREEN” LIGHTBULB MOMENT? - #BNPPSF

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SUSTAINABLE FINANCE

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GLOBAL LEADERSHIP ON SUSTAINABLE FINANCE IS

SHIFTING EASTWhat are the implications for investment in Asia Pacific?

MODERATORPavan Sukhdev | Founder & CEO, GIST Advisory, and UN Goodwill Ambassador

PANELISTS Ma Jun | Chief Economist of the People’s Bank of China (PBoC) Research Bureau

Mohammad Daud Bakar | President and CEO, International Institute of Islamic Finance (IIIF).Eila Kreivi | Director & Head of Capital Markets, European Investment Bank (EIB)

Ajay Dua | Director, Aviva Life Insurance Company, HSBC InvestDirect India, and Independent Director, Dabur India and Essar Power

As the Asia Pacific region, led by China and India, continues to outpace global GDP growth, sustainability finance is shifting east. China has emerged as a leader when it comes to green finance and although work still has to be done in India, the sustainability growth momentum is strong.

A key theme that emerged from the discussion was around disclosure and transparency. As Ma Jun, Chief Economist of

“Going forward, the potential for the green bond market to grow is massive. It may grow between 20 and 30 percent per year for the next 10 years, given the current very low ratio

and given the huge demand for green bond financing.”

- Ma Jun, Chief Economist of the People’s Bank of China (PBoC) Research Bureau

People’s Bank of China Research Bureau said: ”Without environmental information, the finance sector is unable to identify who is green or who is not green and therefore unable to allocate resources especially financial resources to the green sector and the green companies.”

“If you rely on the market to reach a consensus on disclosure, it may take 10 years or 20 years. But governments can do that in two to three years.”

- Ma Jun, Chief Economist of the People’s Bank of China (PBoC) Research Bureau

• It will take time for Asia’s share of the sustainability financing asset pool to grow. Most green financing is in USD and the Euro and Asia will ultimately need these investments in their own currencies but the market requires time to develop.

• China’s Environment Ministry and insurance regulators are drafting rules to introduce mandatory pollution liability insurance in areas where environmental risks are high.

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• China is also introducing a 3-step programme aimed at improving disclosure of environmental information. The first step implemented this year requires large publicly listed polluters to publish and disclose environmental information. In 2018, a semi-mandatory approach based on “disclose or explain” will be introduced for all listed entities. By 2020, full disclosure will be mandatory.

• China has made two recommendations to the G20 Finance Study Group: to improve the environmental risk analysis by

financial institutions and secondly improve availability of environmental data for financial analysis. These initiatives will help to reduce the perceived risk of investing in green sectors.

• India plans to develop 175 gigawatts of renewable energy in the five years to 2022. Of that as much as 100 gigawatts are to be solar power; about 60 gigawatts wind power; 10 gigawatts biomass-based; and 5 gigawatts of hydro power.

• Despite having the right policy formulation, India still hasn’t done enough to create a framework for green finance. The government’s own priority is still only meeting basic needs to be able to earmark any sizeable funds for funding green projects.

S U S TA I N A B L E F I N A N C E S U S TA I N A B L E F I N A N C E

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S U S TA I N A B L E F I N A N C E S U S TA I N A B L E F I N A N C E

GREEN FINANCE Opportunities and challenges in linking capital markets to

sustained economic growth

K E Y TA K E - A W AY S

The challenges of unlocking the potential for green finance to shape Asia Pacific’s future – particularly through financing crucial infrastructure requirements – were keenly debated in the afternoon panel devoted to the role of green finance in shaping capital markets.

• Significant opportunities lie ahead in green financing, especially in infrastructure financing in Asia. Strengthening the engagement with issuers and improving the standards of impact reporting is imperative to the growth in this area.

• Regulation should be used to lay down a framework in order to facilitate good governance in green financing. Creating a standard in which the “greenness” of a project can be assessed, quantified and compared with other projects will help accelerate the adoption of green securities.

• There is an inherent challenge and need for infrastructure investment, especially in Asia. As much as US$1.7 trillion/ year is required; currently, this is only US$260 bn.

• There are two main ways to conduct infrastructure financing, but the majority is currently under the “corporate bank loan” category. So there is a growing need to diversify the source funding, one of which is tapping into the bond markets.

• As power/utility infrastructure investment is expected to take up as much as 66% of the USD$1.7 trillion needed per year, green bonds are key to providing the funding required for the multitude of infrastructure projects needed in the coming years, especially in Asia.

• The theme of “impact reporting” was a key emphasis of this session. Gregory Schneider-Manoury (Humanis) said that quantifiable impact is crucial in demonstrating to clients how

MODERATORStephanie Sfakianos | Head of Sustainable Capital Markets, BNP Paribas

PANELISTS Gregory Schneider-Manoury | Head of SRI, Humanis

Ray Tay | Vice President - Senior Credit Officer, Public, Project and Infrastructure Finance Group, Moody’s Investors Service

Flora Chao | Head of Funding, Asia & Pacific, International Finance CorporationFelipe Gordillo | Green Bond Analyst, BNP Paribas Asset Management

his funds are contributing to the mitigation of climate change. He quoted that “For every US$1 million invested, approximately 17,000 tonnes of CO2 is reduced.”

• Flora Chao (International Finance Corporation), similarly, reinforced the importance of impact reporting. IFC (part of the World Bank Group) has been issuing green bonds since 2010 and is a strong proponent of impact reporting. (She highlighted IFC’s recent 2017 impact report published a few weeks back.)

• The topic of “regulation” was also discussed extensively, in relation to whether this can help encourage green financing. The panellists in general concluded that regulations are imperative for this market to grow, especially in China where corporates tend to follow PBoC/NDRC guidelines. Regulations will help set a standard for impact reporting and give a definition for green finance.

• Some of the panellists said that markets will have their own social dynamic and it is beyond regulation. But regulation can help speed things along and act as an accelerator for the changes that are required to happen. And at this early stage, it is important to be innovative. If a particular regulation doesn’t work, toss it out, and try something different.

• There was a brief discussion on price signals for green finance vs. traditional finance. Conclusion was that until we see a standard for impact reporting, we wouldn’t see this reflected in price signals.

• They also briefly touched upon sovereign issuance of green bonds: Panellists have diverging views.

• The case for: Diversifying investor base, sovereign green bond issuance has more foreigner interest vs. local. This can help provide financing for many government-funded infrastructure projects.

• The case against: By definition, sovereign issuance has no pre-allocation. So investors will not know where the proceeds will be spent on exactly, which is in conflict with one of the assessment criteria set out by some in their investment process.

“Good regulation is not a constraint; it is an incentive to innovate”

- Gregory Schneider-MaunouryHead of SRI, Humanis

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THE ENERGY TRANSITION TRILEMMA IN ASIA PACIFIC

Driving sustainable economic growth while de-risking existing capacity.

MODERATORPhilippe Joubert | Executive Chair of Global Electricity Initiative, World Energy Council

PANELISTS Didier Sire | Senior Advisor to the Secretary General & Head of Sectoral

Programmes, World Energy CouncilJennifer Westacott | Chief Executive, Business Council of Australia

Tim Nelson | Chief Economist, AGL, AustraliaHelena Vines Fiestas | Head of Sustainability Research, BNP Paribas Asset Management

The panel agreed that the targets for limiting global warming set in Paris, (COP21), will not be achieved. While the challenge faced by the energy market as it transitions to low carbon alternatives is enormous, technology innovation and technology transfer are seen as key elements to improve the situation.

Notably, innovation of renewables and Carbon Capture and Storage were viewed as critical. Governments need to provide a more appropriate regulatory environment and companies need to do more regarding disclosure of carbon related programmes and activities. The panel discussed these issues from the market, corporate and investor perspective.

“Carbon is everywhere. We have to decarbonise. And we have to start with energy. This is why this panel is interesting: because normally energy is development and development is energy.

And this region here has to be developed.”

- Philippe Joubert, Executive Chair of Global Electricity Initiative World Energy Council.

“The sum of commitments [in the Paris Accord] requires five thousand million tonnes of abatement by 2030, over-and-above the existing policies. Now that is more that the entire annual emissions of the EU and to get to the 2 degrees target that’s another 15 thousand million tonnes by 2030.”

- Jennifer Westacott, Chief Executive, Business Council of Australia.

“Australia is literally going through a disorderly transition. So there’s a lot of lessons that can be learnt from Australia to not make the same mistakes we’ve made. But part of that is both a modernisation issue as well as a decarbonisation issue.”

- Tim Nelson, Chief Economist, AGL, Australia.

“Energy transition is the other name for development” …

- Jean-Laurent Bonnafe [quoted by Philippe Joubert, Executive Chair of Global Electricity Initiative,

World Energy Council]

“The rise of solar and wind will go on, will continue at an unprecedented rate, and we will see a huge development of these new technologies.”

- Didier Sire, Senior Advisor to the Secretary General and Head of Sectoral Programmes,

World Energy Council

• Decarbonisation is a challenge to incumbent businesses, but also offers extensive new business opportunities. The transition to a carbon neutral world is such a huge task that it will actually reshape the world economy.

K E Y TA K E - A W AY S

• From an investor standpoint, companies and countries need to consider how they report, how they track their carbon impact, and ensure their plans are credible and feasible, but also ambitious enough to achieve global targets. Reporting and disclosure is the biggest barrier for investors to properly assess carbon risks. • Providing information is one thing, but investors want to see how business strategies align with the two degrees world.

• Orderly energy transition is being held back by poor regulation, leading to investment reticence and to investor uncertainty. • Renewable energy development will continue, in tandem with dispatchable power (ie power on-demand), provided most likely by gas-powered alternatives. And there is a lot of thought now into grid-scale battery storage and about pump hydropower.

• Increasingly investors are collaborating to put pressure on companies for them to take action to reduce carbon risk and to enhance transparency. Pressure is being applied by investors exercising their voting rights and amending their voting policies to reflect their climate change strategy.

“In a nutshell, as investors, what we need to do is to assess how companies are managing climate risk. And for that we need to see a clear picture of where they are now, where they are going, where they intend to be and how they plan to get there.

- Helena Vines Fiestas, Head of Sustainability Research, BNP Paribas Asset Mangement.

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I M P A C T I N V E S T I N G

INVESTING FOR IMPACT IN ASIAMyths and Realities

MODERATORArnaud Tellier | Head of Investment Services, BNP Paribas Wealth Management, Asia Pacific

PANELISTS Royston Braganza | CEO, Grameen Capital India

Jayaroopa Jeyabarathi | Principal, Patamar CapitalGabriel Schulze | COO, Schulze Global Investments

Francis Ngai | Founder and CEO, Social Ventures Hong Kong

The panel agreed that impact investing is growing rapidly and the next decade will likely see it become a mainstream strategy for investors. Future growth will depend on an enabling ecosystem that has multiple players, which includes more than just social enterprises, but also investors ranging from insurance companies to pension funds. The 17 Sustainable Development Goals (SDGs), part of a wider 2030 Agenda for Sustainable Development, will help spur investments and growth in impact investing.

• Action aimed at achieving the SDGs will help to create a platform and eco-system to develop bonds, investment vehicles and other tools to deliver impact and returns. The “17 goals fit like a glove,” according to Braganza.

K E Y TA K E - A W AY S

• Impact investing requires innovation, risk-taking, flexibility and creative financial solutions. For instance, how do you work with social entrepreneurs and start-ups to ensure they do not dilute capital too quickly, or how do you buffer failure using philanthropic capital?

“Capital is the fuel for growth, for job creation, for almost everything that we care about in this room. I do believe strongly that profit and impact can go together and in most cases should go together.”

- Gabriel Schulze, COO, Schulze Global Investments.

“We defined impact in our own way and that is unlocking economic opportunities for the low income households.”

- Jayaroopa Jeyabarathi, Principal, Patamar Capital. “We are at the beginning of the movement.”

- Francis Ngai, Founder and CEO,Social Ventures Hong Kong.

“Embarrassingly, the returns for this sector are higher than the mainstream sectors. How do we ensure that we have a moral compass that is constantly pointing us to where we want to go?”

- Royston Braganza, CEO, Grameen Capital India.

I M P A C T I N V E S T I N G

• Impact investing should be accompanied by a financial return. If a business is unable to deliver shareholder returns, then either the company is underperforming, which will limit its social impact, or the sponsor is taking advantage of shareholders’ capital.

• Investors keen to get involved in impact investing should go through an intermediary. Intermediaries such as banks have the ability to overcome infrastructure challenges and put the solution to work.

• Investing and working with start-ups and social entrepreneurs

will help create a pipeline of deals. Impact investing requires investors to look past risk and common misconceptions.

• Scaling up impact investing requires the right solutions, connections and network, as well as a diversified collection of case studies that provides evidence of investments that have delivered impact and returns. .

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ENVIRONMENTAL, SOCIAL AND

GOVERNANCE (ESG)

These panels focused on board engagement, as well as the tools at Asset Manager and

Asset Owner disposal to manage their ESG integration strategies. With the board playing an

important role in setting a company’s long-term strategy, consideration of ESG issues is now an

integral factor when determining strategy. All panelists agreed that analysis of ESG issues is as

important in the investment process as traditional financial analysis.

AL GORE - FIDUCIARY DUTY IN THE 21ST CENTURY

(click here)

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SUSTAINABILITY & GOVERNANCE IN THE BOARDROOM

How are investor expectations and regulations driving corporate change?

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• Intangible assets (strategy, relationships with customers and suppliers, brand) make up a large part of a company’s value. These intangibles are directly affected by sustainability issues so if a company isn’t actively managing its ESG exposure, it is not properly managing risk.

• ESG language helps identify issues but the ultimate aim is that these issues won’t be standalone. They need to be separated out for awareness and then reabsorbed back into company culture.

• Investors need to ask questions about company performance from an ESG angle – what are the risks to earnings growth from ESG issues?

“A CEO, forgive me, is nothing without the board. The board gives the CEO direction.”

- Philippe Joubert, Earth on Board.

• Board responsibilities are fast-evolving and they must adapt and plan for the challenges that climate change and other sustainability issues bring.

E S G

“Don’t put this in the compliance bucket. Put this fundamentally as part of integrating in the way you think about strategy and risk because that’s what the boards are there to do.”

- Ian Woods,AMP Capital

MODERATORAngelina Kwan | Vice Chair and Board Member, The Women’s Foundation; Managing Director,

Head of Regulatory Compliance, Hong Kong Exchanges and Clearing LimitedPANELISTS

Ian Woods | Head of ESG Investment Research, AMP CapitalEmily Chew | Global Head of ESG, Manulife Asset Management

Philippe Joubert | Founder and CEO, Earth on BoardSeiji Kawazoe | Stewardship Officer, Sumitomo Mitsui Trust Bank • Board communication with investors needs improving.

Long-term investors want transparency on climate change action, for example. Even though most well-run companies are looking at ESG issues, they are not necessarily good at communicating this.

“Climate change materiality for all industries, for all countries, everywhere, all people, is so clear that you would be remiss in your duties as a board member to not have at least a process in place for considering it.”

- Emily Chew, Manulife Asset Management

• In Asia, a lot of companies do not have a good corporate governance culture. Family-run listed companies, in particular, struggle with the changing nature of corporate governance. It will be interesting to see how these companies evolve as the next generation takes over.

• Current ESG ‘hot topics’ for boards and investors: cyber security; climate change; human rights and supply chains; inequality and poverty and the role of companies in achieving the SDGs; tech disruption. Companies with stronger corporate governance give investors greater confidence that they can deal with these issues.

E S G

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GREEN CHINA & FIDUCIARY DUTYGenerating alpha while respecting investors obligation

and responsibilities

This panel started off challenging the outdated definition of “Fiduciary Duty”, which has not been updated since 1970s-80s. The original definition states that a Fiduciary should be aiming to generate maximum return in the short-term for its shareholders, even if it is at the expensive of others factors that may be associated with negative externalities.

• Fiduciary duty has traditionally been viewed as a barrier to ESG in Asia, especially when the term “Fiduciary Duty” does not even exist in China. However, some large state pension funds in China are bound by state laws to take into account a duty of care to its clients. This “care” does not necessarily have to be on ESG grounds; however, they are expected to support any governmental objective.

• Driven by recent changes in government policies, we are increasingly seeing many larger/more progressive pension funds in Asia leading the way in updating what is required as a Fiduciary. Integrating ESG factors in their investment processes is undoubtedly at the centre of these changes. An example of this: GPIF in Japan now has US$ 9bn worth of assets directed in 3 ESG ETFs, one of which focuses on prompting gender equality.

• Raising awareness on the importance of stewardship as an integral part of the fiduciary duty.

• Investors should assess “ESG risks” as part of their risk assessment process when making an investment decision.

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• Investors shouldn’t overlook the factor of governance on performance, especially in emerging markets. They should also appropriately reward those companies that are making efforts on strengthening corporate governance.

“If you are in the business of generating returns, ESG risks are not factors you can afford to leave out”

- Mary Leung, Head of Advocacy,Asia Pacific, CFA Institute

“We would rather have a small underperformance today, than a big underperformance tomorrow”

- Alex Ng, CIO, Asis PacificBNP Paribas Asset Management

• A second key point of focus is on “ESG risk”. Asia has done well in terms of return this year, but on the other side of the equation, investors should also consider the risk they taking in their portfolio. • Yet, a majority of funds in Asia, and especially in China, still favour maximum near-term returns over long-term investments that are based upon stronger ESG principles. One positive is that it is encouraging to see China’s recent shift in government policies begin to impact how funds consider ESG risks, which could act as a catalyst to accelerate the incorporation of ESG in investment processes across Asia.

• The growing presence of ETF/Index Funds is also beneficial to this ESG transition in Asia. The risk of being excluded due to poor ESG practices is far too great for companies to ignore, which may help set a baseline/minimum standard for ESG.

• Investors should appropriately reward those companies that have made efforts on improving governance and avoid those that have adopted unsustainable business practices. Interesing to note: China is making positive strides in this direction

• By using a more holistic framework to assess investment opportunities and incorporating ESG principles, investors may need to bear some short-term cost for a better long-term return.

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MODERATORYoram Layani | Head of Institutional Solutions Sales, Asia Pacific, BNP Paribas

PANELISTS Elodie Feller | Programme Lead, Investment, UNEP Finance Initiative

Alex Ng | CIO Asia Pacific, BNP Paribas Asset ManagementMary Leung | CFA, Head of Advocacy, Asia Pacific, CFA Institute

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SOLVING THE BLACK HOLEHelping companies incentivise better ESG performance

in their supply chain

MODERATORCynthia Tchikoitsoff | Head of Supply Chain Management Group Asia Pacific, Transaction Banking,

BNP Paribas Asia PacificPANELISTS

Naissa Bauerie| Procurement, Head of Projects & Development Asia Pacific, Lafarge Holcim Jovilyn Cotio | Supply Chain Finance Program, Asian Development Bank

Kevin Franklin | Senior Vice President, ELEVATETony Simons | Director General, ICRAF World Agroforestry Centre

The panel’s discussion centred on identifying challenges within their own industries, the strategies and the incentives to enhance ESG performance in the supply chain as well as ways to measure performance. A key observation is that the majority of businesses see ESG as an ethical and regulatory issue not as a means to create long-term financial gains. While some multinationals are moving towards the direction of attracting value and impact investors, smaller companies’ efforts are primarily driven by pressure to comply and meet regulatory requirements.

K E Y TA K E - A W AY S

“This is not just about businesses communicating that we are doing something socially sustainable, socially responsible, environmentally responsible. But actually, realising that if your

business is responsible, it is sustainable; and as you incorporate that in your day-to-day processes, you are benefiting financially and it is also helping in your longer term interests.”

- Jovilyn Cotio, Supply Chain Finance Program, Asian Development Bank.

What we are doing is trying “to visualise all of the investments we are making in sustainability and in ESG to come up with success, and if we don’t have those perspectives and if we can’t see the stretch goal, we will fail.”

- Tony Simons, Director General, ICRAF World Agroforestry Centre.

“I am led to believe that those who support sustainable supply chains live longer, have more friends and enjoy a better love life.”

- Tony Simons, Director General, ICRAF World Agroforestry Centre.

• A strategy to incentivise better ESG performance in supply chains is to connect finance to the desired changes in behaviours and performance criteria. The Asian Development Bank recommended that big buyers could work with partners or banks to figure out supply chain finance solutions. “Your supplier can leverage their relationship with you as a big buyer to gain access to financing at a cheaper price,” said ADB’s Cotio.

• Corporates should “combine insights around influence with insights around risks,” according to ELEVATE. A company that spends a lot of money with a particular supplier can demand that the supplier align with the company’s code of conduct and ESG requirements.

• A robust responsible sourcing programme requires risk assessment and due diligence. Companies should have well-defined policies, such as a code of conduct, and assess the risks related to the issues in that policy.

• ICRAF World Agroforestry Centre defines ESG performance around five themes: productivity; profitability; environmental sustainability; social inclusion; and good governance and ethics. “Choose a few proxy metrics not hundreds that tell you 80 percent of what you need to do,” was the recommendation.

• Constant communication with the supplier, regular assessments, tracking and continuous improvement of the process are required to implement any ESG strategies within the supply chain.

• When auditing a supplier’s ESG initiative, a 360-degree view is necessary. An on-site visit must include the view from the workers. Other perspectives including training, capacity building and culture will provide a better understanding of whether it is a sustainable change.

E S GE S G

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ESG PERFORMANCE DATAImproving the quality of the investment management process

and enhancing risk analytics

K E Y TA K E - A W AY S

• ESG data helps investors form an overall picture of a company, including its corporate governance culture and how it is managing risk. But ESG is not only an expansion of traditional risk monitoring – it can also be performance enhancing.

• ESG should not be a standalone product. ESG goes hand in hand with being an active investor and must be incorporated into existing products.

• Investors are increasingly demanding responsible investment. Asset managers who don’t integrate ESG face reputational risk.

• Board responsibilities are fast-evolving and they must adapt and plan for the challenges that climate change and other sustainability issues bring.

• Governance is well-understood, Environmental and Social factors are newer and need to be demystified.

• Diversified asset owners must be consistent and incorporate ESG analysis across all asset classes, not just equities. Fixed Income is the next major asset class where ESG integration will become mainstream.

“ESG and sustainability makes good business sense.”

- Talieh Williams, UniSuper

“How do you demonstrate this is actually not just about risk mitigation but it’s really, you know, performance enhancing? … there’s a growing body of observations to start supporting this.”

- Jason Mitchell, MAN Group

• ESG integration in equities investing is now mainstream. According to a BNP Paribas Securities Services survey, >75% of surveyed asset owners and managers have integrated ESG in to their investment process.

• The biggest hurdle for further ESG analysis is data quality but there is optimism that this is improving.

• ESG scores are just ‘noise’. The value lies in analyzing the underlying ESG indicators.

• Investors should form a view of what is material to a company and engage with the company. At the same time, companies should be able to tell investors what ESG issues they think are relevant and how they are handling them.

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MODERATORMadhu Gayer | Head of Investment Analytics and Sustainability, Asia Pacific,

BNP Paribas Securities ServicesPANELISTS

Rizal Mohamed Ali | Vice President, Responsible Investment, KWAP Talieh Williams | Manager, Governance & Sustainable Investment, UniSuper

Jason Mitchell | Head of Sustainability Strategy, MAN GroupAmine Bel Hadj Soulami | Global Head of Research & Sustainable Investments,

BNP Paribas Global Markets

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Kim Clijsters won the 2009 US Open 18 months after the arrival of daughter Jada. She is one of a few women to have won a Grand Slam title after becoming a mother. She talked about how she balanced her role as a professional in her field and a mother, gender equality and being a coach to young children.

KIM CLIJSTERS

G E N D E R E Q U A L I T Y

She went on to say while there are physical differences between men and women, women are fit enough to play five sets. However, she questioned if an audience would watch an extended game between two unknown players. “We can play five sets but that is not the point. For the fans, it is just more appealing if it doesn’t drag out that long.”

“You learn how to balance. The quality of everything that I do now is a lot higher than it was in the past”

“I have a daughter and a son and I don’t treat them differently and why should it be different out in the open world.”

“I needed those losses to be able to win my first Grand Slam and my next one and my next. It helps you to get to where you would like to be.”

“There is no secret to success. It’s hard work. You can’t achieve great results without having passion.”

A highlight from the session was when Clijsters was asked about pay equality for women and men given that women play less sets in the grandslams. BNP Paribas’ Head of Cash Equity Distribution for Asia Pacific, Natalie Shaw, explained that the reason women play three sets instead of five dates back to a time when women still had to wear corsets while playing tennis, leading one of the competitors to faint on the court. Clijsters shot back: “Maybe we should put Roger Federer in a corset and see how well he plays five sets.”

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