Eastspring Investments: Responsible Investment Report 2022
18
Company A
Company A is an energy company in an emerging market. Given the increased impact of transition risk to high emission industries such as the energy sector, and the proliferation of companies setting long-term climate targets without near to mid-term clarity on execution plans, Eastspring Singapore reached out to the company to clarify its capex plans for decarbonisation with a focus on the 2022 – 2026 timeframe. This helped the team build confidence on the near-term risks and opportunities that the company can mitigate and capitalise on, respectively. In response to the question by the investment team on the underlying assumptions driving future market demand for energy, the company mentioned that they were anchoring their strategy on the two assumptions that were relevant for their specific position in the market: 1 Continued proximity to, and ability to access cheap and low carbon gas, which will continue to be in demand beyond 2050. 2 Enhanced focus on decarbonisation of existing operations, whilst developing a more sustainable plan of developing new transition technologies. The investment team sought greater clarity on the company’s focus on new transition technologies to assess how the company was positioning itself to specific transition opportunities. The company demonstrated that it is building capacity to assess and subsequently invest in future energy diversification projects with synergies to the core businesses. It shared the creation of a fund and a dedicated rese arch centre featuring a combined portfolio of projects focused on developing biofuels, hydrogen, and offshore wind power. We also attained a better grasp of the company’s governance of its climate strategy, which demonstrated Board oversight as well as executive implementation under a committee overseeing firmwide Occupational Health and Safety (“OHS”), Environment, and Sustainability initiatives.
Climate transition capex
Eastspring Singapore
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