2 Mar 2024

Insightful sharing by NUS SGFIN Managing Director, Prof Sumit Agarwal, at the BES Symposium on Futures Sustainability 2024: The Future of Green Finance where as guest-of-honour, he addressed participants on the pressing challenge of climate change and the urgent need for transformation required across all aspects of our society, and particularly in the financial services sector.

He spoke of the need for our financial systems to pivot to prioritizing environmentally sustainable economic activity,  which is a complex challenge for several reasons:

First, there will be winners and losers in the transition to net-zero. Some companies will choose to transform, or they may emerge as winning providers of clean technologies for our future energy needs. Other companies, in particular those involved with environmentally damaging extractive resources such coal, oil and gas, will inevitably face the reality of stranded assets. This will have painful, and potentially existential consequences.

Second, the transition to net zero must be carefully phased. A managed phase out of existing environmentally damaging assets is needed. While it is unrealistic to cease consumption “over-night” for resources such as oil or gas, listed companies face strong stakeholder demand for complete and immediate divestment from such resources. This divergence in stakeholders’ interests may explain why we are seeing growth in government-backed transition and blended finance solutions.

Last but not least, there is growing concern raised of firms over-inflating the impact of their environmental activities – a process known as greenwash. Inconsistent reporting and evaluation principles is a problem, cultivating an atmosphere of distrust in corporate sustainability data and the value of associated actions.

Despite these challenges there is a relentless momentum towards greening our financial systems, and a growing demand for talented young professionals to support our transition. SGFIN is proud to contribute thought leadership, insightful research and meaningful education on this critical front!