In an age when digital agriculture is being actively promoted, greater private capital should be injected into the agriculture industry to ensure its balanced development, according to an academic. “The financial demand for agriculture is quite large, but public capital is limited. At this point, we need to get more private funds into the industry,” Kevin Chen Zhigang, a senior research fellow at the International Food Policy Research Institute, urged on the sidelines of the Asian Financial Forum 2020 on Tuesday. China’s agriculture sector is dominated by public funds, with the central government granting more than 100 billion yuan (US$14.5 billion) to the sector annually. But, too much public capital is likely to crowd out private funds, said Chen. At present, private money accounts for just 20 percent of the total investments in agriculture. Such a proportion is far less than that in some key agricultural nations like the Netherlands, where private funds take up about half of the sector’s total investments. “But, this is easy to understand. Investors pursue profits, while agriculture is an industry with high risks and long payback periods,” said Chen. He urged the private sector to get engaged in agriculture through some blended financing models that involve both sides, such as public-private partnerships. By so doing, public money from the government and non-governmental organizations could help reduce risks that private capital may face in the initial stages. Chen noted that agricultural scientific research is one of the segments which are in need of capital. With the rapid development of mechanized and digital agriculture, new technologies have been deployed to ensure food security. Technologies, including wireless tools, data collectors and crop monitors, have been adapted during the production process. Farmers could harness real-time data on production costs, speed and output. They are also able to obtain information including how light can affect crops, and which crops are starved for water or afflicted with disease or pests. Some startups with these technologies have drawn interest from investors. VSS — a Hong Kong-based company using non-contact sensors and system construction to provide solutions for digital farming — has secured an investment from a local fund. At the same time, increasingly health-conscious consumers care more about what’s in their food, pushing vendors to boost the transparency of their supply chains and track the route of products to the market through suppliers and shippers. Food safety education is a key area for private investors as well, as it could guide consumers’ eating habits and reduce food-borne diseases, said Chen. The Food and Agriculture Organization and the World Health Organization have stressed that safe food is critical to promoting health and eradicating hunger — two of the primary aims of the Sustainable Development Goals. Safe food production also improves sustainability by enabling market access and productivity, which drives economic development and poverty alleviation, especially in rural areas. According to the WHO, investment in consumer food safety education has the potential to return savings of up to US$10 for each dollar invested.

Riding high on the goals and undertakings to build sustainable communities around the world, deep-pocketed financial institutions have a bigger role to play in investing for a greener and better future for mankind, a China Daily Asia Leadership Roundtable in Hong Kong heard on Tuesday. As people today try to carve out workable solutions for a slew of pressing issues, including food waste and environmental pollution that hang like a Sword of Damocles over their heads, the role that public funds could play is very limited, Kevin Chen, chair professor of Zhejiang University and senior research fellow at the International Food Policy Research Institute, said at a panel discussion themed “Rewriting the Investment Strategy: Climate Change and Food Security”, held as part of the annual two-day Asia Financial Forum. “By contrast, private funds have a growing and key role to play in filling the huge investment gap. No matter how many solutions we have at hand, you do need investments to make them happen,” he said. “The private investment community should judge itself as a player and a driver for sustainable initiatives.” Natalie Chan, a senior adviser with the Civic Exchange, warned that with an expanding global population and rapid urbanization, the challenge facing the planet is real and serious. “In China, specifically, by 2030, almost 70 percent of the population that would be over a billion will actually be living in urban cities,” she said. The year 2030 is the deadline set by the United Nations for its sustainable development agenda. At the heart of the bold and structured agenda are a new, universal set of sustainable development goals that UN member states will be expected to use to frame their agendas and political policies. Based on statistics, Chan pointed out that people living in the cities consume 50 percent more energy, 40 percent more water and 30 percent more food than their counterparts in rural communities. “This is only the story on the demand side. On the emission side, what’s going on is very much similar,” she noted. “Together, it leads to sort of a vicious cycle. The point is how we could break and turn the cycle.” Guo Xiaofei, director of green and sustainable finance of corporate and investment banking Asia Pacific at Natixis, believed that on the demand side, the issuer today has the asset, while on the supply side, the investor has the capital. “So, the more relevant issue is how we can play this market scale up.” Citing green bonds, one of the most mature green finance instruments in the market at present, as an example, Guo said: “The question is how we can ensure that more and more issuers feel comfortable stepping into the market and, from the investor side, how they can constantly integrate environmental, social, and governance indicators into their investment strategies.” She stressed there’s a lot of work, particularly in Asia, to be done to essentially build up market confidence. Citing the ongoing Australian bushfires, the sheer devastation of which has shocked the world, Hannah Routh, partner, sustainability and climate change advisory leader at Deloitte China, said the bushfires have essentially propelled climate risks into public debate. As governments and institutions around the world redouble their efforts to raise public awareness of the sustainable business, Routh believed there’re really some encouraging signs. “Issues like climate change have become a topic of conversation among the general public, not just for the climate enthusiastic like me, but people in the streets are talking and thinking about how climate changes will impact them,” she said. She noted recent encouraging signs include recent moves by the Hong Kong Stock Exchange, which has issued stricter and more demanding requirements for ESG reporting for listed companies. All Hong Kong-listed companies, therefore, will have to describe how climate risks can affect their operations and, more importantly, how they’re going to tackle the risks. As a firm believer that the capital and institutional investors have what it takes to play “the key part” in environmental protection and climate change, Vivek Pathak, regional director of East Asia and the Pacific at International Finance Corporation, however, said he doesn’t think investors and enterprises are able to price in the risk factors in general agriculture. “As an investor, I would be very keen to know what you’re doing with water usage. It may not be very relevant today but water is not priced in most countries. It takes 15,000 liters to produce a kilo of beef and 300 liters to produce a kilo of vegetables, and when you look at the price of beef and vegetables, I don’t think they’ve been priced appropriately,” Pathak explained. He pointed out that the waste in the agriculture industry is huge. But, by utilizing good logistics, like the cold chain and fast delivery, the waste could be greatly reduced, and that would greatly benefit the whole environment. Elaborating on his own investment rationale, Pathak said he would invest in a company that is harvesting or producing crops in a way that preserves the soil and the nutrients in the soil for three years as against 18 months. He would ask questions about how the firm is rotating its crops. These are all aspects that most institutional investors would not bother to take a good hard look at. Pathak said rating agencies should also join the game and do their part, urging them to integrate the ESG indictors into their ratings, as a helpful reference for the average investor to pick out companies that are doing business in a green, environment-friendly, sustainable manner.

Climate change related investments are poised to climb rapidly in the coming years as risks associated with the problem intensify, while regulators worldwide are waking up to the issue, reckoned Hannah Routh, risk advisory partner with Deloitte China. Investors need to take a longer term view... Think about the opportunities as much as the risks The raging and protracted wildfires gripping Australia, Routh said, have propelled climate change into the public limelight, prompting the general public to talk and think about how climate change will impact their lives. This shows an increase in the general awareness of risks associated with climate change, and related physical damage. Regulators across the Asia-Pacific region, such as Hong Kong’s Securities and Futures Commission, Hong Kong Stock Exchange and the Hong Kong Monetary Authority and the Monetary Authority of Singapore, as well as their counterparts around the world, are beginning to delve into the climate issue more often than before, suggesting that any related regulation could be implemented sooner than later, said Routh. Chinese mainland businesses, according to Routh, are quite sophisticated in relation to climate change, as China has been championing the idea of green finance for some time. Investments under the Belt and Road Initiative — the flagship outbound investments of the world’s second-largest economy — could also be considered as the destination for the next wave of investors in terms of green finance, she said. Having worked for 25 years in the field of climate change, Routh sees herself as a climate optimist. But, the optimism has been seriously challenged in recent years as climate science shows the urgency of decarbonisation. To begin with, there’s a lack of “investable projects” with a real impact. Such a shortage needs to be addressed urgently, she warned. “It’s not the lack of money; it’s not the lack of projects; it’s the gap.” Although many investors have signed up international initiatives on climate change, such as the Task Force on Climate-related Financial Disclosures. It’s still too early to tell if these commitments are filtering through to actual investments quickly enough. Adding to the dilemma is the requirement that companies have to submit financial reports to their investors on a quarterly basis no matter what. According to Routh, even if companies want to invest to reduce carbon emissions, that might pay back over three years. These companies fear that would have a negative impact on their next quarterly report. “Investors need to take a longer term view,” she said. This would allow businesses to invest and build for the long term. “Think about the opportunities as much as the risks,” said Routh, indicating a bright future is still ahead despite a bumpy ride along the journey.

China is making good progress in aligning itself with international standards for green bonds in order to create a more harmonized framework to attract global investors, says an expert in green and sustainable financing. Unlike Europe, where green finance is driven by investors, China adopts the top-down, policy-driven approach which boosts the fast development of the country’s green finance market, Guo Xiaofei, director of green and sustainable finance of corporate and investment banking Asia Pacific at Natixis, told China Daily on the sidelines of the 13th Asian Financial Forum in Hong Kong on Tuesday. In the first half of last year, the total amount of green bonds issued on the Chinese mainland surged to US$21.8 billion — up 62 percent on the same period in 2018. According to Guo, the contributions came mainly from regional banks and the private sector. Although nearly half of the entire volume of green bonds issued by the mainland is in line with international standards, the country is making strides in meeting world green finance standards in issuing offshore bonds, Guo said. In 2018, the G20 sustainable finance study group, led by the People’s Bank of China, continued to advocate green finance worldwide. Besides, the Network for Greening the Financial System, co-initiated by China, and which is a global network of central banks and supervisory authorities propelling a more sustainable financial system, has brought in more members, further strengthening the collaboration. According to an annual report on China’s green finance development issued by the PBOC, Chinese green bond issuance exceeded 280 billion yuan in 2018. Guo said the top sectors in China’s green bond market are energy, transportation and real estate. “Asian investors are getting more and more aware of green finance,” she said, adding that six Chinese investment organizations have signed up the United Nation Principle for Responsible Investing. “This is a very clear signal sent to the market that Chinese investors are focusing on ESG (environmental, social and corporate governance).” When structuring green bonds, green loans and sustainable supply chain finance, Guo, who heads Natixis’ sustainable finance activities for the Asia-Pacific market, stressed that green integrity is the key point for issuers that focuses on what can be seen as green and make the structure robust enough. Meanwhile, issuers should avoid any possible greenwashing that indicates corporations labeling themselves as green financing with no outcome forthcoming, Guo added. In September last year, Natixis rolled out its Green Weighting Factor as a tool to manage its own portfolios based on their climate impact. The French investment bank embedded the mechanism into its credit process, and the evaluation kicks ahead of the credit decisions. “Natixis is the first bank in the world to actively manage the climate impact of our own balance sheet,” Guo said. The lender has developed a set of indicators to monitor the transition of its portfolio. According to Guo, Natixis has been talking to Chinese regulators to share its experiences and the concept of the Green Weighting Factor to see if it can be embedded in the Chinese market. Being actively involved in green finance globally, Natixis is the first foreign bank to sign up for the Green Investment Principles for the Belt and Road Initiative to promote green investment in the region.

新聞稿 即時發佈 中國日報匯聚金融領袖 探討氣候變化及食物安全挑戰下的投資新佈局 2020年 1 月 14 日，由中國日報與「亞洲金融論壇」合辦的題為「氣候變化與食物安全投資新佈局」的專題研討會在香港舉行，吸引超過200名投資者、企業決策人和金融界專業人士參會。 思匯政策研究所高級顧問陳琦，浙江大學講席教授、國際食物政策研究所高級研究員陳志鋼，國際金融公司東亞和太平洋地區總監潘偉凱，法國外貿銀行綠色與可持續金融業務董事郭曉菲，以及德勤中國風險諮詢亞太區可持續發展服務領導人Hannah Routh出席專題研討會。 思匯政策研究所高級顧問陳琦表示，商業市場隨着投資者或消費者的需求而改變，希望投資者不僅僅把自己視為市場的參與者，更要將自己看作是幫助社會解決氣候變化和食物安全問題的領導者。 浙江大學講席教授、國際食物政策研究所高級研究員陳志鋼指出，私募基金非常重要，想要可持續發展，那我們需要向私營部門尋求幫助。而私人投資則是實現可持續發展目標，以及説明人們脫離饑餓的關鍵。 國際金融公司東亞和太平洋地區總監潘偉凱強調，伴隨着人們變得富裕、人口的增長，土地供應和水資源是有限的。 我們需要首先意識到這個問題，才能有出路，但他不確定人們是否已充分認識到糧食安全和氣候變化帶來的挑戰。 法國外貿銀行綠色與可持續金融業務董事郭曉菲指出，金融機構在促進低碳經濟轉型的過程中扮演重要的角色。作為投資者，我們將不斷把ESG指標納入我們的投資戰略。 然後面對這個問題：什麼是「環保」?只有在所有市場參與者都同意這個定義後，我們才能發展這個市場。 德勤中國風險諮詢亞太區可持續發展服務領導人Hannah Routh指出，將社會問題的矛頭指向政府、機構或企業是很容易的，但我們應該做的是，讓整個商業生態系統認清其職責所在，互相尊重，共同協作，共同推動市場的發展。 關於中國日報 中國日報是中國國家英文日報，創刊于1981年，擁有報紙、網站、移動用戶端、臉譜、推特、微博、微信、電子報等十餘種媒介平臺，全媒體使用者總數超過2億。 截至2019年12月，中國日報微博粉絲數超過4650萬；微信訂閱人數700萬，用戶端全球下載使用者超過2500萬，是我國唯一下載量過千萬的英文新聞用戶端；臉譜帳號粉絲數超過8200萬，位居全球媒體帳號粉絲數第二位；推特帳號粉絲數430萬。 關於中國日報亞洲領袖圓桌論壇 亞洲領袖圓桌論壇(www.cdroundtable.com)，旨在搭建一個由亞洲國家和地區的政、商、學界領袖和社會精英參與的高端對話和交流平臺，圍繞亞洲地區經濟、商業、產業和社會發展等具有戰略影響的重要議題展開討論和分享見解，以增進中國與亞洲和西方國家的交流和理解。

For Immediate Release PRESS RELEASE Financial Experts Examine Investment Strategies amid Climate Change and Challenges In Food Security Jan 14, 2020, HK: Co-organized by China Daily and the Asian Financial Forum, a panel discussion session, themed “Rewriting the Investment Strategy: Climate Change and Food Security”, was held at the Hong Kong Convention and Exhibition Centre on Tuesday, Jan 14, 2020. The event attracted more than 200 investors, corporate heads and professionals from financial institutions across Asia. Climate change has emerged as the world’s most pressing issue in recent years. According to the World Meteorological Organization, 2015-2019 is set to be the warmest five-year period in recorded history. The burning of the Amazon rain forest and the bushfires raging in Australia have drawn international attention as well. Climate change is also threatening food security in terms of food availability, food accessibility, food utilization and food systems stability. The International Food Policy Research Institute forecasts that, by 2050, prices of rice will increase by 32 to 37 percent as a result of climate change, while yields will fall between 10 and 15 percent. For responsible investors, the realities of climate change and the challenges in food security have become important considerations in risk management strategies, as well as informing broader investment themes. Five experienced, knowledgeable professionals joined the forum. They were Ms. Natalie Chan, Senior Advisor, Civic Exchange; Dr. Kevin Chen, Chair Professor, Zhejiang University; Senior Research Fellow, International Food Policy Research Institute; Mr. Vivek Pathak, Regional Director, East Asia and the Pacific, International Finance Corporation; Ms. Xiaofei Guo, Director of Green and Sustainable Finance, Corporate and Investment Banking, Asia Pacific Natixis; and Ms. Hannah Routh, Partner, Sustainability and Climate Change Advisory Leader, Deloitte China. They shared their views on how climate change and food security considerations are driving investment strategies and taking investment decisions forward. Ms. Chan hoped that investors will see for themselves that the process of system change is not just a player and an actor, but also a driver to help our society move towards a climate-ready and food secure society. Dr. Chen said private funding is the key factor if we were to meet the sustainable development goal and make people free from hunger. Mr. Pathak said as people become richer and the population goes up, the soil and water resources we have are limited. He believes we need to recognize there’s a problem if we intend to tackle the issue. Ms. Guo urged financial institutions to play a key role in the transition towards a low-carbon economy. From the investor side, they are constantly integrating environmental, social, and governance indicators into investment strategies. Ms. Routh said the challenge for the business community regarding climate action is that the whole ecosystem must move as one. It’s easy enough to point the finger at one party, whether it’s the government, regulators, rating agencies or corporates, but what is needed is to have the entire ecosystem identify what their responsibilities are with respect to each other in order to move forward together. About China Daily Founded in 1981, China Daily covers 220 million readers and users worldwide through diversified platforms, including newspapers, websites and mobile and social media. The number of China Daily followers has now reached 46.5 million on Weibo, 7 million on the WeChat Blog platform, 82 million on Facebook and another 4.3 million on Twitter. About China Daily Asia Leadership Roundtable The China Daily Asia Leadership Roundtable is a by-invitation network of movers and shakers in Asia, providing platforms for focused dialogue, issue investigation and possible collective action on strategic issues relating to Asia’s economic, business and social development. Our aim is to enhance communication and increase mutual understanding between China, Asian and Western countries. Roundtable events are held in major cities across Asia.