A study by the Carbon Tracker Initiative estimates that as much as $ billion of coal assets across Southeast Asia can no longer yield the expected economic return in the next decade due to tighter environmental policies and competition from cheaper renewable energy. Conversely, as climate change mitigation efforts intensify globally, environmentally responsible companies can be expected to outperform their benchmarks. Besides technological advances and policy changes, growing consumer awareness of environmental issues will also affect companies’ bottom lines and thereby the risk-return calculations of investors in these companies. Finally, as I mentioned earlier, beyond the cold calculation of climate-related risks and returns, many investors want to invest in a way that contributes to leaving behind for future generations a planet that is habitable, green, and pleasant. Sustainable investing is becoming a live issue in Asia. The story of Asia’s huge infrastructure needs is well-known. The Asian Development Bank has estimated that developing Asia needs to spend $ trillion annually on infrastructure up to 2030. What is less well known is that climate mitigation and adaptation costs will add another $ billion to the region’s annual investment needs. This is a significant load. It will require a radical change in the way public sector policies, private sector financing, and investment decisions are made. Ensuring sustainability is very much a part of Singapore's ethos. Making the best use of limited resources has, for a long time, been a key part of our nation-building process.

CDP Worldwide, an international environmental non-profit, estimates that a group of the world's largest companies potentially faces $ billion in asset write-offs within the next 5 years due to climate change related risks. The indirect effects on investments come from policy changes and technological advances aimed at meeting climate mitigation goals. Countries that signed up to the Paris Agreement in 2015 have pledged to limit the increase in global average temperatures to between 1.5 degrees Celsius to 2 degrees Celsius above pre-industrial levels. What does this potentially mean in practice? According to the International Energy Association (IEA), limiting global warming to 1.5 degrees Celsius means that renewables have to make up 70 - 85% of electricity production by 2050. It was only 23% in 2015. This scenario is not far-fetched. Technological advances and increases in production capacity have dramatically reduced the cost of renewable energy sources like wind and solar. If R&D on long duration energy storage technologies is successful, it will solve the problem 5/7  BIS central bankers' speeches  of intermittency that currently hinders the scope for renewable energy to supply electricity round the clock. Changes in technology that make renewables economically viable could potentially leave many traditional energy assets stranded – and this has serious implications for investors. Changes in government policy such as higher carbon taxes will also have profound investment implications by altering the structure of industries and businesses. This is not something happening far from home.