Asia Pacific Energy Assembly 2021: Day 3 Takeaways

The third and shortest day of our Asia Pacific Energy Assembly was by no means that least exciting, in fact the emerging role of ESG and the accelerated energy transition has revealed the deep passions and commitment by oil and gas players to develop a market that considers both energy access and the immediate climate concerns.

Beginning with our Keynote from Dr. Kaho Yu of Verisk Maplecroft, we also heard from the likes of: Addleshaw Goddard, Standard Chartered Bank, Sustainalytics, Singapore Exchange (SGX), Institute For Energy Economics and Financial Analysis, Carbon Tracker Initiative, TOTAL, Clifford Chance, Gracejoy Capital, Women in Energy Asia and ExxonMobil.

• A New Momentum for ESG in Asia Pacific
  
  • Kaho Yu – Lead Energy Analyst, Asia Research, Legal & Consultancy – Verisk Maplecroft

Dr. Kaho Yu presented an enthralling presentation of how he sees the Asia Pacific energy industry engaging with and adapting to ESG metrics. While most understand and acknowledge the varied constraints between East and West in the field of ESG, the Asian market has responded far more positively and actively than anticipated.

Driving ESG shifts were the accelerated transition timeline and the acceptance that replacing oil and coal, with gas infrastructure can make immediate in-roads to carbon emissions. Beyond this, the international funds and lenders are aligning themselves to European standards, and many industrial actors would like to attract that capital still.

On the other hand, the removal of some finance and investment due to too few ESG constraints has revealed an opportunity for regional lenders and/or private equity funds to fill the capital vacuum.

• The Role Of The Capital Markets In Driving The Energy Transition
  • Martin Stewart-Smith · Addleshaw Goddard
  • Galid Lahdahda · Standard Chartered Bank
  • Nicholas Gandolfo · Sustainalytics
  • Chong Lek Foong · Singapore Exchange (SGX)
  • Melissa Brown · Institute For Energy Economics and Financial Analysis
  • Kingsmill Bond · Carbon Tracker Initiative

One of our most enthralling and passionate panels, we saw the panel question how capital markets can play an influential role in the energy transition.
[To read a full write-up of this panel, read more here]

Capital markets have played a pivotal role in the successful development of the oil and gas sector: e.g. providing capital through institutional investors and reserve-based loans via banks, while the sector in return generated healthy returns to investors and lenders alike. Capital providers have over time become comfortable with the cyclical nature of oil and gas and learned to rely on built-in mechanisms to counter high and low-price environments, as well as significant innovation that created efficiencies within capital and operating expenditure.

However, the need to decarbonise has initiated a holistic reconsideration of the role of capital markets; particularly how they can facilitate access to capital to stave off climate change, manifesting itself as a growing requirement for financiers to take responsibility for how and where they deploy their capital.

• COVID-19 has accelerated the “S” in ESG: Why getting it right is good for business?
  • Carine Coudeville · Total
  • Tiernan Brady · Clifford Chance
  • Ling Lai 黎穆稜 Gracejoy Capital
  • Sylvie Louisfert · Women in Energy, Asia
  • Tracy Lothian · ExxonMobil

The last panel one on agenda was one of the most encouraging panels we have hosted, as the panelists sought to cut through all the PR about ESG and focus on the crucial “S” aspect – Social. It is no surprise the energy sector reflects some more archaic corporate structures that do not always consider the wider effects of diversity, inclusion and local integration. Too often there is a top-down view by oil and gas players about what is best for a market, based-off an economic view and this ignores deficiencies elsewhere in organisations.

One easy and obvious example was the dearth of female employees, particularly in oil and gas more so than renewable energies. By attracting and balancing a workforce there are proven economic rewards. Then by engendering training and development of local places and their people, large oil and gas producers assist the wider economic development beyond narrow shareholder value.

The point being that all stakeholders, not just shareholders, have become increasingly important considerations of major international corporates.

The sector once was able to capture much of the best talent from every corner of the globe, those appeals have been watered down significantly over the last 20 years to the point where oil and gas players fall behind technology innovators. And this is where Big Oil is investing, to capture talent and in turn, solving the energy crisis ahead.