Author: Admin

China’s Greater Bay Area (GBA) offers the largest business development opportunity insurers have seen in decades.

That’s according to Binuo Erth, an experienced asset specialist and ESG (environmental, social and governance) activist.

‘With many long-term insurance operations in the region, the industry will play an important role in this development,’ says Erth.

ESG Pioneer

Erth, who is the founder and Managing Partner of asset management company Vellum, is a speaker at the upcoming Invest Hong Kong Symposium in Melbourne,

She says insurers and brokers who attend will gain a better understanding of how they can position themselves to benefit from the region’s overall growth potential.

However, she points to Hong Kong in particular, as the global ESG pioneer.

‘The Hong Kong stock exchange was one of the first to make ESG reporting mandatory for listed companies,’ she says.

‘I am inspired by Hong Kong’s financial services industry’s involvement in and commitment to ESG

‘Ultimately, we all need to take responsibility for it, and I’m looking forward to sharing and promoting this with everyone.’

Believing in education

Born in China, Binuo Erth completed her Batchelor degree before moving to Australia to gain her MBA. Since graduating in her 20s, she has clocked up well over a decade of global and local financial market expertise.

‘My family’s best investment was in my earlier education which has been the foundation of my current career and business success,’ Erth tells.

‘Also, without knowing about ESG, they inspired me to follow in their footsteps, by always contributing to the community and making a significant social impact through their activities.’

Erth says that as Managing Partner of Vellum Group, she is still a strong believer in ongoing education, not just academically, but also the learnings people get from experiences and their peers.

‘Education has certainly enabled me to work with some of the best investment institutions,’ Erth says.

‘From a young age, I learned to look at investments beyond their financial value to incorporate elements of environmental, social and governance.

‘That’s why I am now very much aligned with ESG-related investments and projects.’

Responsible investment

Vellum manages all aspects of responsible investment and practices for corporations, SMEs and non-for-profit organisations.

‘We assist funds, businesses, corporate ventures, family offices and charities to better measure and manage ESG performance, which leads to strong environmental and social value creation,’ she explains.

‘We have sourced an impactful investment pipeline across many sectors and regions and developed strategic partnerships to drive efficient resource use and positive outcomes.’

ESG framework

Starting as an asset manager, the company has grown into helping clients design, integrate and improve ESG strategies and initiatives.

‘In 2021 Vellum established a new ESG framework with management tools to encourage environmental value and social value creation beyond climate initiatives and gender balance,’ Erth says.

‘Given the size of our deals, ESG was always an essential element of our own risk management, particularly through 2019 and 2020, when we realised that we can’t just sit there and avoid them without actively making an effort.

‘And we also wanted to help businesses of all sizes execute meaningful environmental and social values.

‘Now we’re focused on making ESG tangible and building investment through ESG projects.’

Driving change

Erth confirms Vellum’s current biggest goal is to drive change while achieving financial goals.

‘ESG shouldn’t just be ticking boxes or relying on government grants,’ she says. ‘The aim is to recognise the value in positive impacts and keep creating that kind of value.’

For Vellum, ESG education is the biggest challenge and opportunity.

‘I think everyone understands the importance of ESG but they don’t necessarily know how it works or whether their organisation is creating ESG value,’ Erth says.

‘We want to demystify the ESG framework and reporting requirements and make them accessible and tangible.’

Measuring and reporting

Erth adds that Vellum is committed to playing a role in improving ESG education and research.

‘That’s why we have established our own ESG reporting framework,’ she says.

‘It allows us to help more organisations develop a real ESG focus, with SMEs and non-for-profit organisations included.’

In the end, Erth predicts that all organisations will implement ESG reporting into their financial reporting.

‘Investors, consumers, the community and stakeholders will embrace non-financial value as much as, if not more than, financial value,’ she says.

To that end, Erth aims to continue Vellum’s work with other ESG specialists, research institutions, environmental scientists and social scientists to develop ESG measurement and reporting further.

‘It is my ambition to ensure ESG reporting is as measurable and comparable as financial reporting,’ she says.

Erth would like to work to improve ESG performance for organisations as well as actively creating environmental value and social value.

‘I also want to recognise and validate the value creation of charities for example, beyond the financial.’

Driving positive change

Based on her core belief in the power of business to drive positive change Erth plans to inspire Invest Hong Kong symposium participants in the world of tangible assets and ESG.

‘My team at Vellum is already working to positively impact the financial, environmental and social performance of tangible asset portfolios,’ she says.

‘I want participants to really see the possibilities of examining, measuring and amplifying the impacts of leveraging their expertise in strategic planning, mergers and acquisitions, operation optimisation, corporate ventures and all aspects of sustainable investment and asset management.’

‘The Invest Hong Kong Symposium will be a great forum for exploring how we can collaborate locally and globally. I am so pleased to be a small part of it.’

 

As the recent IPCC climate health check report begins to sink in and transitions into action globally, the Commonwealth Scientific and Industrial Research Organisation (CSIRO) last week released the CO2 Utilisation Roadmap, designed to outline how Carbon Capture can provide a solution to Australia’s climate woes.

The report outlines how Carbon Capture and Utilisation (CCU) technologies can provide the opportunities that Australia desperately needs to reduce its emissions to meet global reduction commitments, and more importantly halt global warming.

Whilst the roadmap correctly outlines how CO2, captured from industrial processes or from the atmosphere, can be transformed into synthetic fuels, food and beverages and even building materials, it problematically promotes a limited “technology not taxes” approach to climate risk management.

At Vellum, we firmly believe that definitive climate positive action can only be achieved when carbon mitigation and carbon capture are both implemented in conjunction with one another. We believe this is the solution to not only addressing current challenges but sustainably revolutionising tomorrow’s practices, to go beyond climate survival and make positive impact.

Our approach is to support new technologies and tomorrow’s sustainable solutions through our ESG Fund and advisory practice, whilst simultaneously balancing this transformation with active sequestration and carbon capture practices to make a difference today.

One of the more novel opportunities for carbon capture is kelp farming in Australia.

In Asia, seaweed farming is already a multi-billion-dollar industry which is seeing rapid global expansion, due to its function as an extremely nutritious and fast-growing food source, and also because of its ability to combat climate change. According to the BBC, seaweeds are thought to sequester nearly 200 million tonnes of CO2 every year.

Kelp is one of the most advantageous types of seaweed on account of its rapid growth (up to 2 feet a day) and the fact that it does not require maintenance or fertiliser. Seaweed absorbs CO2 through photosynthesis for growth and upon death, majority of the carbon it has absorbed is locked in its tissue which is transported to deep oceans.

Beyond its carbon capturing potential, the World Bank estimates that if the sector were to grow by just 14% year on year by 2050, seaweed could increase global food supply by 10%.

We at Vellum are always looking for investment opportunities like this, innovative solutions that tackle short and long-term problems, and also align with our strict ESG criteria. In this case, kelp provides an opportunity in both carbon capture and reduction, and though novel, ultimately stands as an example of the type of innovative project that will be needed to address Australia’s climate problem.

 

 

 

References:

 

https://www.gasworld.com/australia-to-become-leader-in-carbon-capture-says-csiro-report/2021504.article

https://www.bbc.com/future/article/20210406-how-kelp-can-help-solve-climate-change

https://www.abc.net.au/news/2021-08-21/taxpayer-bill-for-carbon-capture-and-storage-hits-4-billion/100375854

 

New South Wales born Tesla chairwoman Robyn Denholm recently urged Australia to join the world in embracing a rapid transition to electric vehicles. She argued that Australia faced a massive opportunity to become a renewables power-house thanks to the country’s wealth of natural resources, including lithium, necessary to make electric vehicles.

The call comes as Australians continue to lag behind the rest of the world on electric car purchases, despite a large proportion (50%) expressing they would consider buying an electric vehicle as their next car.

The urgency of encouraging a rapid transition to electric is paramount as 75% of all new car sales need to be electric by 2030 for Australia to achieve net zero emissions by 2035, according to the Climate Council.

At Vellum, we share Robyn Denholm’s vision for Australia and are similarly looking to support a clean energy revolution right here at home.

We aim to achieve this by facilitating a transition to a more sustainable world in the present, but also forging a vision for the future that makes this transition more attainable. Electric cars are an excellent example of how we implement this approach.

Our approach is to uphold the highest environmental, social and equitable governance standards possible, not only in our own practice, but when we work with other organisations too. We also ensure that our investments align with this ESG-first approach and that they are all capable of facilitating positive change. This helps us encourage transformative environmental change in the present, including renewable energy and low-emission transportation, like electric vehicles.

While we want to transition to clean cars to drive, at Vellum we are also fans and investors in classic cars as an asset class. That’s why we are establishing Vellum Perpetual Collection Fund. For a car appreciating nation looking to make a clean transition to an electric future, our Perpetual Collection Fund will provide exposure to investment in rare and collectible motor cars and will back clean car projects. Funds like this help to preserve historical and appreciating vehicle types, while modernising and replacing an entire generation of fossil-fuel dependent cars. The Perpetual Collection Fund will be well-positioned to facilitate a transition toward the future of electric vehicles and provide investors with exposure to an asset class that has outperformed Property and global Equities, returning an average of 14% pa over the past 10 years (Knight Frank wealth report).

We believe that the time to transition to a more sustainable, low-emission society is now. We stand at the forefront of this transformation, ready to assist our clients by playing a role in the positive transformation of the present and also the facilitation of change for the future.

 

To find out more visit us:

https://vellum.hk/portfolio/vellum-perpetual-collection/

 

 

Sources:

• https://www.abc.net.au/news/science/2021-04-20/australians-want-to-buy-electric-cars-what-is-stopping-us/100071550
• https://www.knightfrank.com/wealthreport
• https://www.smh.com.au/business/companies/tesla-boss-says-australia-is-missing-out-on-big-climate-opportunities-20210602-p57xes.html

As interest in ESG aligned funds reaches unprecedented levels within a strongly performing Australian financial market, increased attention has turned to the question of ‘how we can ensure well-meaning investors aren’t being misled by green washing?’.

Cathie Armour, Commissioner of ASIC, recently announced a review into green washing practices, aimed at improving market governance and accountability amongst some of Australia’s top funds.

The action comes off the back of results revealed by the Responsible Investment Association Australasia (RIAA) which found that 62% of surveyed respondents believed ethical super funds outperform others (up from 29 per cent in 2017).

As a firm believer in ESG investing, we are always pleased to see action in Australia that moves us closer toward national policy that protects investor confidence in their investments, that they are as ethical as they are reported to be.

Already we have seen successful rollouts of ESG regulations in other regions, such as the EU taxonomy, which is the foundation of the criteria Vellum uses to assess ESG performance and share six fundamental objectives that guide or business:

1. climate change mitigation
2. climate change adaptation
3. sustainable use and protection of water and marine resources
4. transition to a circular economy
5. pollution prevention and control, and protection
6. restoration of biodiversity and ecosystems and one that does not harm the others

 

It is crucial that we see increased movement toward all-encompassing regulation which protects investors and nurtures the ESG movement in Australia.

Last month the Australian Government made its ambitions to support carbon capture as a means of viably reducing emissions clear, as it announced a commitment of $50 million in funding for carbon capture, use and storage projects.

The investment in carbon sequestering technology marks a significant contribution toward the net zero emissions 2050 target, one which the International Energy Agency’s Net Zero by 2050 Clean Energy Roadmap argues is critical to the target’s achievement.

At Vellum, we see huge opportunities in the application of carbon capturing techniques and materials in Australian building practice as a means of reducing emissions at a commercial scale.

Our research has shown that one of the most innovative ways that we can bring carbon capture to commercial practice is through the use of bamboo in construction.

Project Drawdown, the world’s leading resource for climate solutions, placed bamboo plantation in the number 21 spot out of 76 solutions to reverse global warming. In fact, they estimate that if planted determinedly, bamboo could sequester as much as 21.3 gigatons of carbon dioxide over the next 30 years.

Beyond these potentials, bamboo is currently one of the most sustainable materials on earth; as it grows at a rapid rate, can be harvested without killing the plant and requires no fertilisers or pesticides. It is also capable of benefiting the soil from which it is grown, improving land productivity and quality. Bamboo is also estimated to provide 35% more oxygen and absorb 40% more carbon dioxide than trees.

For these reasons, we at Vellum are very interested in the potentials for clean, sustainable resources such as bamboo within the Australian property market that adhere to our strict ESG standards and our commitments to the local and global environment.

The potential for sustainable building materials to assist countries capture carbon and meet reduction targets is already being recognised overseas, with the bamboo market currently worth $27 billion, predicted to reach as high as 98.30 billion by 2025.

As the Australian Government looks for opportunities and technology to embrace carbon capture in the Australian market, we see no better opportunity nor time to consider green solutions such as bamboo production and construction.

With global organisations all setting their sights on achieving net zero emissions, an all-too-common ‘deadline’ thrown around is the year 2050. Whilst this commitment made by many organisations, from Coles Group to the Australian Federal Government, is undoubtedly a positive one, it is critical that we pose the question ‘What are the practicalities of achieving net zero emissions by 2050?’.

As we all know, it is easy to make ambitious plans – harder to realise them, but in the case of some of the world’s largest emitters, there is no room for an overpromise – underdeliver scenario on climate. To prevent this situation and assist in charting out what the transition to net zero must look like, the International Energy Agency last month produced the Net Zero by 2050 Clean Energy Roadmap.

The report aims to plot the road to net zero and the global effort required, in both behavioural and fiscal terms.

Some of the key findings from the report include:

• ‘To reach net zero emissions by 2050, annual clean energy investment worldwide will need to more than triple by 2030 to around $4 trillion’.
• ‘Clean energy innovation must accelerate rapidly, powered by investment’.
• ‘Policies need to be designed to send market signals that unlock new business models and mobilise private spending’.

The forecast behind the report’s insights is one of a clean energy revolution. A movement supported by policy, led by investors and powered by innovative ideas. These findings align with our beliefs and practices at Vellum.

We believe firmly that the greatest opportunities for transformation toward a more sustainable way of living are those ideas that are just beginning to emerge. For Vellum, this means actively supporting solutions developed to address contemporary issues from their infancy.

As illustrated in the IEA’s report, we are witnessing a significant shift in 2021, in which investors looking to support real innovation are no longer required to choose between impact and profit. This is why we are committed to helping our clients achieve both, by getting behind the transition to a more sustainable world and supporting the organisations that will be a force for change, not just a commitment to it.

In 2021, two significant forces appear to be holding Australian investors interest above all others; housing and ESG standards.

Only this week it was reported that property values around Australia have increased 10.9% over the last 12 months, causing the big banks to forecast 20% to 30% rises in property values. This forecast coincides with Wednesday’s report of unprecedented interest in Sydney’s first net zero property.

Whilst all signs are clearly pointing toward a growing interest in sustainable housing and ESG aligned property development, the focus is often on energy rating and operational efficiency. This often sees the consideration of the sustainability of building materials used to construct the property overlooked.

Last year it was reported by the Global Alliance for Buildings and Construction that emissions from the buildings construction industry constituted 10% of all energy related CO2 emissions on the globe. In conjunction with this data, according to the Chartered Institute of Building, construction uses up to 32% of the world’s natural resources. These significant statistics highlight the critical consideration that must be paid by prospective and current investors to ESG aligned construction projects.

At Vellum we have identified a need to harmonise the increased interest in property investment and ESG investing, in order to inspire a green revolution in the property and building industry. Whilst our property expertise lies primarily in the build-to-rent space, we strive to ensure that we are always maximising the sustainability of our developments, from planning to delivery and beyond.

An example of ESG aligned construction research we are exploring currently is in bamboo as a sustainable building material.

Bamboo is a sustainable resource that does not require re-planting, possesses strength superior to steel and which absorbs up to 12 tonnes of carbon dioxide per hectare, yearly. Bamboo is seeing major popularity in ‘green’ building projects across Australia in three primary uses: as a laminate, for its fibre, or less commonly, as a dried, usually woven material. Bamboo can store four times more carbon than trees and produces 35% more oxygen than a timber forest, which is feasible to grow in most environments.

This is just an example of the work we are doing to ensure that we as an organisation can harness this growing interest in ESG and property as a force for reformation and green growth.