Eugenia Koh believes that while philanthropic support is essential, capital markets must help to close the funding gap for global sustainable development goals. Here, Koh, head of impact and sustainable investing at Standard Chartered, speaks to Samantha Welsh about current trends among next gen investors and how they are influencing their families to become more sustainable
LUX: Which sectors are your UHNW next generation clients eyeing post-pandemic?
Eugenia Koh: We find that they are particularly passionate about entrepreneurship and sustainable development. We conducted a thought leadership survey at the height of the pandemic, which found that clean water and sanitation, good health and wellbeing, climate action, quality education, and zero hunger were among the causes of highest importance to investors.
LUX: Does this growing preoccupation with ESG have any intergenerational repercussions?
Eugenia Koh: There are increasing demands on the next generation of clients globally as they navigate a wide range of fast-moving challenges which may be very different from those that their parents face. The resilience and increased interest in sustainable investment during the pandemic has helped some next gen investors with educating their families on the topic. One of them had his sustainable portfolio outperform the family’s main portfolio, and this has changed the family’s view to be more receptive to exploring sustainable investments and how they can help with better risk management and performance.
LUX: How easy is it to measure the performance of ESG investments?
Eugenia Koh: It is important not to be overly simplistic in using performance as a marketing tool as not all ESG investments outperform, depending on the strategy used and depth of ESG integration. When linking to performance, the concept of materiality is key. Not all ESG factors are equal and material: ‘E’, ‘S’ and ‘G’ factors differ based on industries. Take, for instance, airlines: their material ESG factors would include fuel efficiency, carbon emissions and health and safety practices, which would have a bigger impact on bottom line and consumer expectations as compared with such issues as child labour. Material ESG factors have a potential impact on financial performance, either in influencing value creation or destruction.
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LUX: How do you foster a sense of community among participants of the Future Global Leaders Programme?
Eugenia Koh: We keep the experience intimate by keeping the number of participants small, but diverse. Our next gen clients come from a variety of backgrounds: some are entrepreneurs themselves; others are involved in their family business, or are doing something completely different. They appreciate the opportunity to discuss topics that are close to their hearts.
LUX: What’s your go-to advice for next gen investors?
Eugenia Koh: To be clear on their objectives. Just as investors demand rigour in their traditional investments to achieve their financial objectives, they should likewise be clear about their impact objectives and the best approaches to achieve this.
LUX: How can investors avoid fraud, greenwashing and Covid-washing?
Eugenia Koh: Investors should ask their advisers about the ESG strategies of the companies into which they are investing, as well as learning about how ESG factors are integrated into the fund manager’s selection process. At Standard Chartered, due diligence is an important part of what we do. We have launched ESG Select, our in-house review framework, to better support clients in their selection of high quality ESG products with a strong performance track record.
LUX: Tell us about Standard Chartered’s sustainable development goals.
Eugenia Koh: We contribute to raising standards across the world and support the fight against climate change while playing our part in reducing poverty and global inequality. For instance, we are contributing to climate action and clean affordable energy with our commitment to provide project financing services for $40 billion of infrastructure projects that promote sustainable development. We are also looking to raise $75 million for our foundation, Futuremakers, in order to reach 50,000 young people, micro and small businesses to reduce inequalities.
LUX: What drives your own passion for sustainable, responsible, impact investing?
Eugenia Koh: I remember going to Cambodia as a youth with my church group to engage and help the community there and being struck by the poverty, especially in one of our trips to a garbage slum. My friends and I decided to make an annual trip there to continue engagement with the youths we had befriended, and one of my friends eventually moved to set up a social enterprise in Cambodia. That was my first experience with impact investing and leveraging business to uplift families out of poverty.
My [subsequent] experience in grant-making and CSR has helped me see that while philanthropic support is essential, there is also a role that capital markets and finance can play in sustainable development. There remains a significant funding gap in achieving the [UN] Sustainable Development Goals — the annual financing gap to achieve the SDGs by 2030 currently sits at $2.5 trillion — and we need the private sector and finance to play a role in contributing towards this. I am excited when I come across clients and investors who are passionate about contributing towards this, and to be able to help them in their journey.
Eugenia Koh is Head of Sustainable and Impact Investing at Standard Chartered Bank