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Standard Chartered Bank – Investors flood to sustainability in wake of coronavirus

Sustainable investment has seen a boom, with investors looking long term in difficult economic times.

Standard Chartered has reported that money market deposits focused on helping finance sustainable development initiatives saw record inflows in March as coronavirus failed to push investors away from their sustainability goals.

“We’ve seen a remarkable upturn in the amount of sustainable deposits that we’ve been taking as an organisation,” says Alex Kennedy, director of sustainable finance ESRM at Standard Chartered.

“We could have expected things to fall by the wayside as the crisis hit, but it’s been heartening that treasurers and corporates still want to have some impact with their dollar.

“The fact that they’re still depositing into the product allows us to use that liquidity to help finance SDG [sustainable development goals] aligned activities. No matter how hard coronavirus is hitting, the need for renewable power, for loans to entrepreneurs and for healthcare infrastructure, particularly in Asia and Africa, is still there,” Kennedy says.

Desiree Pires, managing director and head of corporate sales Europe FM at Standard Chartered agrees, saying that demand has grown for ESG initiatives in part because liquidity is high as corporates have sought out high-quality liquid assets as the coronavirus crisis unfolded.

“Lots of corporates are making sure that they’ve got plenty of liquidity to see them through this time. It’s what I would call crisis liquidity – it’s not necessarily needed, but it is there as a backstop for difficult times. But that raises the question of what you do in the short term, and you tend to put it on deposit.

“And if you’ve got a choice about a normal deposit or something that could be sustainable, I think that theme is resonating with companies right now and they like the idea of investing in a sustainable way,” Pires adds.

We’re acutely aware that capital isn’t getting to where it is needed the most. We are seeing lack of capital flowing to Asia and Africa. For SDGs in Europe and the Americas around 80-90 percent of finance is realised. In Asia, it’s 60-70 percent, but in Africa it’s only around 10 percent.”

Kennedy adds that financing SDGs in these regions will ultimately decide whether the requirements of the UN’s Paris Agreement on climate change are met or not.

“Being able to shift the way that China, Bangladesh, India use power will have a huge impact on the world’s ability to meet the Paris Agreement. That’s where, as a Bank with a core footprint in Asia, Africa and the Middle East, we can really move the needle.

Chris Leeds, executive director, energy sales FM at Standard Chartered agrees, but believes one of the unusual aspects of coronavirus is that it’s highlighted the impact humans have on the planet.

“We’ve seen a respite from some of the pollution we see in the world, but it’s just that – a respite. Once economies recover, pollution will return.

“People are keen to find out how we can have a recovery that is sustainable, that is able to meet the Paris Agreement. We haven’t actually fixed anything. If anything, if it’s a brown recovery, as opposed to a green recovery, then potentially things will get even worse.”

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