Put your money where your heart is: Sustainable investing is (almost) here!

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PCH.VECTOR-FREEPIK

I write this column with so much excitement, simply because it is the first time I am writing something current, real, and about the Philippines, instead of the research I had done in the past decade. There is good reason for this: almost 12 years since I began dipping my feet into understanding Responsible Investing and Impact investments, they are finally taking shape here in the country. Last Friday, I had the privilege of hosting a Philippine Star event entitled, “Green REIT: Investing in the Future,” which was in partnership with Filinvest Land’s upcoming REIT (real estate investment trust), FILREIT. I had expected a webinar meant to market the new product in the market but was pleasantly surprised that it had focused on where we are in the sustainability agenda.

Just to backtrack, Responsible Investment has been present in developed parts of the world, particularly in the United States and in Europe, but has had such little traction domestically. That is not that surprising considering the environmental, governance, and sustainability standards for companies here are much less developed and regulation is largely weak in comparison. Indeed, research has highlighted the “virtuous” cycle of sustainability in that, the more money a corporation has, the higher the likelihood it can use the extra cash to fund sustainable practices, which in turn contribute to — in the best case — better performance, and in a base case, to lower risks. We have relatively small firms, most of which are still in a growth phase wherein resources are being used to simply recover initial equity and attract investors with high returns. The idea of investing in the long-term, in possibly foregoing short-term profit for long-term gains, not simply economically but for our future generations, is something that ends up on the backburner in countries like ours, and more so in a pandemic situation. I mean, would you really cut out “sin” stocks from your investment portfolio, if those are the ones defensive at the moment?

And yet we had a talk with Yayu Javier, the chairperson of the UN’s Global compact network in the Philippines, which illustrates how we now have our own specific country point-person to encourage our local Asset Managers to sign up to the Principles for Responsible Investment (PRI). In another life, I had spent a decade going back and forth to the PRI offices in Shoreditch, London, as part of their Academic network; I had received grants to examine not just Responsible Investment, but the PRI Regulatory and Assessment Framework, talking to more than 80 Asset Managers in Europe. I hoped but never expected it would ever make waves in my own country, and now the possibility is imminent. Interestingly, she mentioned that 40% of high-net-worth individuals currently own or are considering using impact investments, led by 77% millennials and 46% women! Seventy percent of those who have invested are satisfied with the financial performance of their investments.

Enrique Florencio, the Secretary General of the Association of Development Financing Institutions in Asia and the Pacific, came next. From Asset Management to Development and green finance, he explained the different already existing investments in the space, funded by multilaterals and NGOs. The highlight of his presentation was that these are well-established opportunities with deep pockets of funding, and a burgeoning interest from financiers.

We then had Thomas Baudlot, CEO of Engie Southeast Asia who showed photos of their projects in the Philippines such district cooling systems. With 349MW in green power in Southeast Asia, the green revolution in everyday places like malls and townships is just beginning.

And finally, we had Maricel Brion-Lirio who discussed the upcoming REIT of Filinvest Land. I had been covering this and all the other upcoming REITs very closely on BusinessWorld Live and it was the first time that the sustainability-focused angle instead of the yield play was truly brought to the fore. With the parent company now having actual sustainability standards in place (albeit evolving), buying into the REIT is effectively owning a piece of commercial properties who are held to a higher-than-normal sustainability standard. We were excited enough to have REITs finally come into the market after decades in the making, imagine having a Green REIT: two birds with one stone.

Ultimately, we all determine our investment choices based on our risk appetite and research. But one of the best pieces of advice you will hear repeatedly from analysts and seasoned investors is this: invest in companies you love and believe in; imagine that you will effectively own a part of the company and imagine you should believe in their products and services so much that you will risk putting your hard-earned money in its growth. Some people love food and will invest in the food industry for products they love; some people believe that technology is the future and will put their money there; and yet others — like myself, will have only one dream: to put their money where their heart is, and that is in companies that commit to a sustainable future. No excuses now.

Daniela “Danie” Luz Laurel is a business journalist and anchor-producer of BusinessWorld Live on One News, formerly Bloomberg TV Philippines. Prior to this, she was a permanent professor of Finance at IESEG School of Management in Paris and maintains teaching affiliations at IESEG and the Ateneo School of Government. She has also worked as an investment banker in The Netherlands. Ms. Laurel holds a Ph.D. in Management Engineering with concentrations in Finance and Accounting from the Politecnico di Milano in Italy and an MBA from the Universidad Carlos III de Madrid.