Alpha-Centric ESG Research

Kyle Rudden

I often note that whilst Asia arrived at the ESG party fashionably late, it is making up for lost time, going from idle to full-throttle often by leapfrogging large patches of middle ground. One apropos example is the recent surge in Chief Sustainability Officer (CSO) hires by Asian companies.Rather than going a typical route – like having someone in Marketing do double-duty for a year or so to delay shelling out big bucks for a proper CSO – companies such as <a href="https://www.smartkarma.com/entities/singapore-exchange-ltd" target="_blank" data-smartkarma-citation="entities:1047:1" rel="noopener">Singapore Exchange (SGX SP)</a> and  <a href="https://www.smartkarma.com/entities/hsbc-holdings-plc" target="_blank" data-smartkarma-citation="entities:516:1" rel="noopener">HSBC Holdings (0005 HK)</a> have recruited some seriously-qualified, executive-level CSOs.Big news, but I wouldn't have bothered with it a few years ago.Until recently, there wasn't much "Chief" or "Officer" to the CSO role. At best, companies hadn't yet figured out what to do with a CSO. At worst, they handed out CSO titles for optics; "greenwashing," as it were. CSOs were idealistic and motivated. Managements and Boards just didn't get it, yet.CSOs have since been excepted as equals into the "C-Suite," having proven their worth and earning a voice in all levels of strategic discourse. Exceptions do exist, the CSO role is varied and continues to evolve, and that "greenwashing" daemon still rears its ugly head every now and again.On the whole, however, CSOs are more influential than ever.From an ESG investing angle, the existence of a CSO has two specific implications: 1) it serves as a barometer of overall ESG commitment, and 2) it is associated with ESG outperformance, and lower ESG risk. For some issuers, it can even portend (portend, not predict) future ESG performance.Recent CSO activity in Asia inspired me to dig deeper. "Deeper" is relative, as the CSO pool in Asia (and elsewhere for that matter) is still very shallow. Nevertheless, this is a comprehensive analysis of the evolving CSO role in Asia – generally, and by cross-sections and topics such as:<ul>
<li>
Results: Correlative or causal, CSOs are linked to better ESG performance and lower risk.</li>
<li>
Country: Singapore and the Philippines have the most CSOs by company-count and size.  </li>
<li>
Sectors: Asian-company CSOs tend to concentrate in large-cap sectors and/or industries.</li>
<li>
Education: CSOs have more advanced degrees, from top universities, than do non-CSOs.</li>
<li>
Gender: Singapore and Thailand have the most female CSOs; Japan and India the least.</li>
</ul>

I often note that whilst Asia arrived at the ESG party fashionably late, it is making up for lost time, going from idle to full-throttle often by leapfrogging large patches of middle ground. One apropos example is the recent surge in Chief Sustainability Officer (CSO) hires by Asian companies.Rather than going a typical route – like having someone in Marketing do double-duty for a year or so to delay shelling out big bucks for a proper CSO – companies such as Singapore Exchange (SGX SP) and  HSBC Holdings (0005 HK) have recruited some seriously-qualified, executive-level CSOs.Big news, but I wouldn't have bothered with it a few years ago.Until recently, there wasn't much "Chief" or "Officer" to the CSO role. At best, companies hadn't yet figured out what to do with a CSO. At worst, they handed out CSO titles for optics; "greenwashing," as it were. CSOs were idealistic and motivated. Managements and Boards just didn't get it, yet.CSOs have since been excepted as equals into the "C-Suite," having proven their worth and earning a voice in all levels of strategic discourse. Exceptions do exist, the CSO role is varied and continues to evolve, and that "greenwashing" daemon still rears its ugly head every now and again.On the whole, however, CSOs are more influential than ever.From an ESG investing angle, the existence of a CSO has two specific implications: 1) it serves as a barometer of overall ESG commitment, and 2) it is associated with ESG outperformance, and lower ESG risk. For some issuers, it can even portend (portend, not predict) future ESG performance.Recent CSO activity in Asia inspired me to dig deeper. "Deeper" is relative, as the CSO pool in Asia (and elsewhere for that matter) is still very shallow. Nevertheless, this is a comprehensive analysis of the evolving CSO role in Asia – generally, and by cross-sections and topics such as:

Results: Correlative or causal, CSOs are linked to better ESG performance and lower risk.

Country: Singapore and the Philippines have the most CSOs by company-count and size.  

Sectors: Asian-company CSOs tend to concentrate in large-cap sectors and/or industries.

Education: CSOs have more advanced degrees, from top universities, than do non-CSOs.

Gender: Singapore and Thailand have the most female CSOs; Japan and India the least.


The Rise of the Chief Sustainability Officer in Asia

Research and consultancy, Tabbush Report

Daniel Tabbush

Research and consultancy

Tabbush Report

We provide research and consultancy on Asian banks. Our focus is on what we call “Asian bank research, without the noise.” We are interested in the most critical swing-factors for banks, the NPL and credit cycle, and where we believe there is a gap between perception and reality. We often focus on the less studied components of bank financial statements.  Our research is highly thematic, sometimes examining unlisted banks and companies as a window on mainstream banks. 

Being independent allows us to look at smaller banks, often overlooked by others. Analysis of BIS bank guidelines in the context of Asia, is also a focal point, while we also analyze global banks operating in the region. We use what we believe is the most comprehensive, reliable financials database, SNL Financial. S&P Capital IQ augments our database, with corporate data and CEIC, with economics. 

Asian bank research, without the noise.

Equity Bottom-Up

We have seen strong economic recovery. The beginning of lower credit costs is here, which should continue. Next to follow should be higher dividends, for most. We wonder if HSBC will not be one of these banks?

We have seen strong economic recovery. The beginning of lower credit costs is here, which should continue. Next to follow should be higher dividends, for most. We wonder if HSBC will not be one of these banks?

Silver Point

Thomas J. Monaco

Independent Insight Provider

Silver Point is a boutique research firm that focuses on the broader financial services sector, with a particular focus on troubled institutions globally. 

Asia Ex Japan

Thematic (Sector/Industry)

*Strong Man Strikes Again: Central Bank of Turkey (CBT) Governor Murat Uysal has been released from his duties, and Naci Agbal has been appointed as the new CBT governor. President Erdogan abruptly fired former Governor Uysal after just 16 months, after he indicated that interest rates may increase again in 2020; and*Watch Your Risk: The TRY’s decline of 43% YTD is troublesome, and the potential for a TRY gray market would NOT be of surprise at this stage. We continue to worry about counterparty risks should defaults rise. It’s probably not a bad time to start thinking about purchasing CDS protection on single name securities and on the Turkish sovereign.

*Strong Man Strikes Again: Central Bank of Turkey (CBT) Governor Murat Uysal has been released from his duties, and Naci Agbal has been appointed as the new CBT governor. President Erdogan abruptly fired former Governor Uysal after just 16 months, after he indicated that interest rates may increase again in 2020; and*Watch Your Risk: The TRY’s decline of 43% YTD is troublesome, and the potential for a TRY gray market would NOT be of surprise at this stage. We continue to worry about counterparty risks should defaults rise. It’s probably not a bad time to start thinking about purchasing CDS protection on single name securities and on the Turkish sovereign.

*Military Flashpoint With Greece: In late July, a Turkish seismic exploration ship (“Oruc Reis”) was sent to Kastellorizo, an island on the Greek constellation shelf, to carry out gas surveys through August 23rd, and was accompanied by 15 Turkish naval ships. The French have deployed warships and fighter jets to the area, as the La Fayette frigate is participating in joint exercises with the Greek navy. Tensions between Turkey and France have already been at heightened levels since Turkey targeting the Forbin with radar; and   *Feckless Central Bank Leads To Crisis: A crisis in confidence starts slowly but is difficult to stop once momentum gathers. In Turkey's case, the stop gap measures now appear to be crumbling. With both locals and foreigners fleeing the TRL, the the risks of the introduction of a TRL gray market should NOT be underestimated. MSCI has also threatened to downgrade Turkey's equity market to frontier status which would trigger further outflows.

*Military Flashpoint With Greece: In late July, a Turkish seismic exploration ship (“Oruc Reis”) was sent to Kastellorizo, an island on the Greek constellation shelf, to carry out gas surveys through August 23rd, and was accompanied by 15 Turkish naval ships. The French have deployed warships and fighter jets to the area, as the La Fayette frigate is participating in joint exercises with the Greek navy. Tensions between Turkey and France have already been at heightened levels since Turkey targeting the Forbin with radar; and   *Feckless Central Bank Leads To Crisis: A crisis in confidence starts slowly but is difficult to stop once momentum gathers. In Turkey's case, the stop gap measures now appear to be crumbling. With both locals and foreigners fleeing the TRL, the the risks of the introduction of a TRL gray market should NOT be underestimated. MSCI has also threatened to downgrade Turkey's equity market to frontier status which would trigger further outflows.

Financials Credit Analyst

Hank Calenti, CFA

CreditContinuum

Credit

Underweight <a href="https://www.smartkarma.com/entities/united-overseas-bank-ltd" target="_blank" data-smartkarma-citation="entities:113:1" rel="noopener">United Overseas Bank (UOBSP)</a> Additional Tier 1 (AT1) bonds. From a relative value perspective, we believe these bonds are likely to underperform AT1 bonds of other banks, as well as less subordinated debt issued by UOB.In this insight, we focus on the relative value reasoning behind this recommendation. This reasoning is complemented by our fundamental perspectives concerning the institution. For more details on these perspectives, please see: <a href="https://www.smartkarma.com/insights/bank-contingent-capital-coronavirus-contagion" target="_blank" data-smartkarma-citation="insights:38915" rel="noopener">Bank Contingent Capital &amp; Coronavirus Contagion</a>, as well as, <a href="https://www.smartkarma.com/insights/united-overseas-bank-and-rlar-cake" target="_blank" data-smartkarma-citation="insights:39820" rel="noopener">United Overseas Bank and RLAR Cake</a>.

Underweight United Overseas Bank (UOBSP) Additional Tier 1 (AT1) bonds. From a relative value perspective, we believe these bonds are likely to underperform AT1 bonds of other banks, as well as less subordinated debt issued by UOB.In this insight, we focus on the relative value reasoning behind this recommendation. This reasoning is complemented by our fundamental perspectives concerning the institution. For more details on these perspectives, please see: Bank Contingent Capital &amp; Coronavirus Contagion, as well as, United Overseas Bank and RLAR Cake.

Netherlands

ING Groep N.V. (ING) is a global financial institution. The Company provides retail and wholesale banking services to private clients, small businesses, large corporations, financial institutions, and governments. ING Groep operates worldwide.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

ING Groep NV (ING VX)

The Rise of the Chief Sustainability Officer in Asia

Chief Sustainability Officers can impact ESG performance and risk-adjusted returns. CSOs are becoming more common anong Asian companies, which are...

Kyle Rudden

Banks – Reinstating Dividends

We have seen strong economic recovery. The beginning of lower credit costs is here, which should continue. Next to follow should be higher...

Daniel Tabbush

Turkey – Off With His Head…Again

TURKEY: Central Bank of Turkey Has A New Governor As President Erdogan Removes His Previous Hand-picked Successor. Erdogsnomics Are Not Working.

Thomas J. Monaco

Turkey – On The Brink

*Military Flashpoint With Greece: In late July, a Turkish seismic exploration ship (“Oruc Reis”) was sent to Kastellorizo, an island on the Greek...

Thomas J. Monaco

United Overseas Bank: Go Underweight AT1

Underweight United Overseas Bank (UOBSP) Additional Tier 1 (AT1) bonds. From a relative value perspective, we believe these bonds are likely to...

Hank Calenti, CFA

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)