The world is changing and people are realising that they are not the masters of Earth, but instead stewards of nature. Amid the Covid-19 pandemic and more extreme weather events, the spotlight on sustainability is brighter than ever.

However, the topic of sustainability is much more than conserving the environment, it is also about respecting social rights and creating resilience in our governance infrastructure. This is where the focus on the wider concepts of environmental, social and governance (ESG) comes into play.

Consumers and investors are ever more concerned about how they spend their money, making the extra effort to ensure that the money they spend or invest will also do good. According to a 2020 global survey by Accenture, 60% of consumers have been found to make more environmentally friendly, sustainable, or ethical purchases since the start of the pandemic. Some 90% of these consumers surveyed say that they were likely to continue doing so.

With that in mind, businesses will have to follow suit and start listening to what consumers and investors are looking for. ESG is no longer a “by-the-way” effort in companies, but an integral consideration that can seriously impact profits and investor relations.

As Ghislaine Nadaud, ESG Solutions Asia Pacific director at Sumitomo Mitsui Banking Corporation (SMBC), puts it: “ESG is key for business continuity today and becoming more mainstream as the world starts to move towards approaching ESG as ‘business as usual’ amid today’s unprecedented and challenging landscape.”

mute
SMBC Group has made it a group mission to commit to ESG efforts. SMBC established its ‘SMBC Group x Globe 2030’ last year, a 10- year plan and ESG targets that extend to 2030. In October this year, SMBC joined the United Nations-convened Net-Zero Banking Alliance.

See: Japan's Sumitomo Mitsui nears $2.67 bil deal for Fullerton India

Some of SMBC’s key aspirations under this plan include executing JPY30 trillion ($354 billion) worth of green and sustainable financing deals between 2020 to 2029 that contribute to sustainability; to publicly release at least one report a year that focuses on the results of social impact measurements targeting social contribution activities and to become net zero in its group wide operations by 2030.

“At SMBC, we recognise the importance of our efforts and responsibility to contribute to the global ESG mission at large. We aim to engage and act together with customers and other stakeholders to contribute to the global transformation into a better society,” says Nadaud.

“The goal towards sustainability is one that is long-term and cannot happen overnight. This is where we have to work together, with other parties that share our common goal, to work towards a better and more sustainable future,” adds Nadaud.

Embracing FinTech

How will SMBC achieve this goal? One such solution is strategic partnerships with FinTech. Singapore has recognised the importance of FinTech in enabling the ESG ecosystem. At this year’s Singapore FinTech Festival (SFF), 20 finalists were shortlisted for the 2021 Global FinTech Hackcelerator, where they are challenged to present innovative market-ready solutions addressing real industry needs with positive green impact.

SMBC is taking an active role in the Global FinTech Hackcelerator, sponsoring and mentoring the FinTech start-ups as part of its partnership agenda with SFF for six consecutive years. The theme SMBC will be focusing on in this year’s SFF is creating a sustainable future at the heart of its operations. Its SMBC x Tomorrow initiative focuses on solutions that are innovations beyond banking to answer the evolving needs of its customers and Mother Nature, while the solutions are expected to break the mould with innovations that offer more efficient banking and inclusive technology.

“The Asia Pacific (APAC) region is increasingly shifting its focus on renewable projects and we see the potential in FinTech to help pave the way for a more sustainable future. This trend has significantly boosted the adoption of the ‘renewable project finance’ model, especially for SMEs. We aim to support these customers better with our digital end-to-end platform for renewable energy project finance,” says Keiji Matsunaga, head of Asia Innovation Centre for SMBC.

Matsunaga explains that the end-goal is to guide SMEs to achieve the financing they need for their renewable energy projects. SMBC has recognised the challenge for these companies in obtaining capital and financing for their projects in a timely manner and hence has created a digital platform to bridge the space between the borrowers and lenders.

This platform will enable borrowers and lenders to synthesise key insights, automate contractual compliance and proactively mitigate risk with greater transparency across all counterparties, offering higher deal velocity, lower cost and greater liquidity for syndications.

Borrowers can easily head onto the portal to input their details and requirements and to seek financing support for their decarbonisation journey. Lenders then go onto the portal to process these opportunities. The 100% digital platform will eliminate the need for further information processing for credit memos, while increasing throughput and reducing manpower to handle the influx of projects, as the same pool of resources are able to handle more projects at once; using their time more strategically for decision-making and value-added inputs.

“With this digital platform, lenders can better plan their resources and free up relationship managers’ time to support customers’ needs directly,” adds Matsunaga.

SMBC is also collaborating with government agencies, financial institutions and technology companies in Singapore to build an industry-wide artificial intelligence and data analytics technical platform that generates insight to address common industry-wide challenges in the financial services sector.

In-house efforts

Apart from partnering with other parties, SMBC also plans to release an in-house carbon dioxide (CO2) emission visualisation platform through their decarbonisation journey.

“As a bank, we understand that it takes serious commitment to achieve ESG goals. We recognise that many of our customers are embarking on this journey and we want to partner with them for this. SMBC will be proactive in being at the forefront of leveraging on digital solutions focusing on ESG,” says Matsunaga.

With plans for expansion to APAC, this proprietary tool enables SMBC’s customers to input their ESG goals into the platform. Based on SMBC’s network and existing customer information, the platform will produce a recommendation that will help measure and assess the company’s ESG baseline. It will also provide recommendations from its suite of services and solutions, such as its green loans and green bonds.

“When our customers onboard this tool, we will have better visibility of their ESG plans and goals right from the start. That way, we can provide customised solutions that are most relevant and suitable for them,” adds Matsunaga.

Towards a greener future

As an early adopter of green bonds, SMBC has long been providing its clients support in raising ESG finance in the loan and bond markets.

Last year, SMBC was second amongst global top tier lenders for green and ESG loans with some US$7.5 billion ($10.1 billion) committed through 82 deals around the world. The momentum continued through 1H2021 as SMBC successfully closed another US$1.6 billion of green and sustainable financing in APAC.

“As the 13th largest bank in the world by assets, SMBC is a leader in our home market with an enviable universal banking platform. Leveraging our global network, expertise and knowledge, we are working to achieve our ESG commitments across the world — including redefining our offerings for ESG while deploying the latest in digital technology,” says David Koh, deputy head of corporate banking in APAC for SMBC.

SMBC is more committed than ever towards supporting its customers on their ESG journeys. And to provide the best possible solutions, SMBC is not only working to develop more in-house solutions but also exploring strategic partnerships with world-class FinTech companies.

“ESG is existential. It is not a trend. We will continue to respond to our customers’ needs by providing the best suite of solutions to support them on this vital journey. We have challenged ourselves to be more proactive in identifying key issues and challenges, and very importantly, the digital solutions that can resolve these issues,” says Koh.

“We know we are not IT gurus and will always be a bank first and foremost. That said, according to S&P Global Market Intelligence, SMBC are the largest FinTech investor in APAC, evidencing our commitment to technology and collaboration with other like-minded parties to help our customers to help our customers in the most efficient and effective way possible. The world is changing and we need to evolve with these changes,” he adds.

Photo: The Edge Singapore/ Albert Chua