Ener future for mankind
She noted recent encouraging signs include recent moves by the Hong Kong Stock Exchange, which has issued stricter and more demanding requirements for ESG reporting for listed companies. All Hong Kong-listed companies, therefore, will have to describe how climate risks can affect their operations and, more importantly, how they’re going to tackle the risks.
As a firm believer that the capital and institutional investors have what it takes to play “the key part” in environmental protection and climate change, Vivek Pathak, regional director of East Asia and the Pacific at International Finance Corporation, however, said he doesn’t think investors and enterprises are able to price in the risk factors in general agriculture.
“As an investor, I would be very keen to know what you’re doing with water usage. It may not be very relevant today but water is not priced in most countries. It takes 15,000 liters to produce a kilo of beef and 300 liters to produce a kilo of vegetables, and when you look at the price of beef and vegetables, I don’t think they’ve been priced appropriately,” Pathak explained.
He pointed out that the waste in the agriculture industry is huge. But, by utilizing good logistics, like the cold chain and fast delivery, the waste could be greatly reduced, and that would greatly benefit the whole environment.
Elaborating on his own investment rationale, Pathak said he would invest in a company that is harvesting or producing crops in a way that preserves the soil and the nutrients in the soil for three years as against 18 months. He would ask questions about how the firm is rotating its crops. These are all aspects that most institutional investors would not bother to take a good hard look at.
Pathak said rating agencies should also join the game and do their part, urging them to integrate the ESG indictors into their ratings, as a helpful reference for the average investor to pick out companies that are doing business in a green, environment-friendly, sustainable manner.