Summer Atlantic Capital’s Founder Spoke at Horasis Asia Meeting 2023

Mr. Sebright Chen, Founder and Chairman of Summer Atlantic Capital, was invited to speak on the topic of "ESG as a Global Business Game-changer" at the Horasis Asia Meeting held in Phu Yen Province, Vietnam, on December 4, 2023.

Mr. Sebright Chen's speech is as follows:

I am honored to address this distinguished panel on the crucial topic of "ESG as a Global Business Game Changer" at Horasis Asia Meeting. The discussion today revolves around the transformative power of ESGs in stimulating businesses to view climate change not just as a challenge but as an opportunity. Moreover, the influence of ESGs extends to supporting small-time investors and fostering the growth of green pension funds. As we delve into this multifaceted conversation, we aim to explore the nuances of ESG implementation and critically evaluate its impact on the global investment community.

ESG, standing for Environment, Social, and Governance, has emerged as a guiding framework for responsible and sustainable business practices. It looks at how a company's management and stakeholders make decisions, emphasizing the three pillars of environmental responsibility, social inclusivity, and effective governance. This movement gained momentum with the establishment of the Principles for Responsible Investment (PRI) in 2006, championed by some of the world's largest institutional investors with sponsorship from the United Nations.

The implementation of ESG in the global investment community has been marked by significant progress. ESG as an asset class is making strides, with estimates suggesting AUM between $2.5 trillion and $2.7 trillion in 2022, albeit still a fraction compared to the total global AUM of $98 trillion. Notably, the majority of these investments are based in Europe, underscoring the region's leadership in sustainable finance.

However, the performance of ESG funds has come under scrutiny, raising questions about whether the ESG movement is still at the "lip service" stage or if it has transitioned to real and impactful application. Studies from esteemed institutions like Columbia University, the London School of Economics, and the University of Chicago have highlighted discrepancies between ESG principles and actual outcomes. Companies in ESG portfolios, in some cases, exhibited worse compliance records for labor and environmental regulations.

This brings us to the critical issues surrounding ESG investments and the factors contributing to their underperformance. Challenges include the profit-driven nature of financial institutions, inappropriate ESG standards in certain sectors, overuse of ESG as a marketing tool (greenwashing), and the lack of implementation of ESG standards in the fund management process.

To tackle these challenges, we propose a multifaceted approach. Firstly, reducing fees associated with ESG investment funds can enhance accessibility. Aligning incentives with long-term goals encourages a more patient and sustainable approach to ESG investing. Sector-specific ESG standards, enhanced transparency, and reporting, along with regulatory oversight and enforcement, are crucial steps in ensuring the integrity of ESG investments.

Looking beyond these solutions, active ownership, connecting ESG with impact investing, advocating for industry-specific standardization, and integrating ESG into overall investment management processes are vital strategies. Encouraging stakeholder engagement, promoting innovation and technology, and regular monitoring and evaluation of impact reinforce the commitment to genuine and measurable ESG outcomes.

In conclusion, ESG should not be viewed merely as a financial product; it is a collective responsibility for sustainable and ethical business practices. All economic agents must actively engage in ESG implementation to move beyond mere "lip service" and drive positive global change. Let us together foster a future where ESG is not just a concept but a catalyst for meaningful and lasting impact.

Thank you.