A passion for ocean conservation has led St. James’s Place’s Angelina Lai to be more involved in sustainable investing and she speaks to [i3] Insights how this applies to her role as Head of Division – Asia Investment.
Ten years ago, Angelina Lai decided to take up diving. This not only sparked a fascination with the sport, but also caused her to develop an interest in ocean conservation.
Seeing first-hand the effects of plastic pollution inspired her to become a public educator and organiser of local clean-up days.
“Diving in South-East Asia is amazing; the Coral Triangles of the Philippines and Indonesia are some of the best in the world. But then you come out of the ocean and see all this plastic floating about,” Lai says.
A lot of people in the financial profession are starting to turn their attention to climate change and the [actuarial] profession actually has been one of the front runners as we recognise our skill set, particularly in prediction modelling. Working with probability models is quite useful when it comes to climate change
“The first thing you learn is plastic bags are terrible for turtles because they mistake them for jellyfish, which is their food. So obviously I started clearing that. That’s just what divers do.
“That is really where the passion started in terms of the efforts to combat this and then I started to get more involved with the organisations that organise underwater clean-ups and learning more about other ocean pollutants, such as ghost nets, which are a huge issue in terms of releasing microplastics in the ocean.”
It is a passion she has carried over to her day job as Head of Division – Asia Investment at wealth manager St. James’s Place.
“A lot of people in the financial profession are starting to turn their attention to climate change and the [actuarial] profession actually has been one of the front runners as we recognise our skill set, particularly in prediction modelling. Working with probability models is quite useful when it comes to climate change,” she says.
“I joined St. James’s Place partially because I was attracted by its commitment to sustainability. The company joined the Net Asset Owners Alliance in 2019 and thus has committed to be net zero by 2050.”
St. James’s Place, which manages over GBP140 billion in client assets, has committed to becoming climate positive by 2025 in its internal operations, while it is aiming to achieve net zero for its supply chain and partnership by 2035. Finally, the company is aiming to achieve net zero emissions in its investment portfolios by 2050.
“So, in terms of the actual operations, we are aiming to be net zero before 2025 and that is why we’re saying we will be positive by 2025,” Lai says.
“Some of that does have to be done through purchasing carbon credits and investing into green projects, including tree farms in China.”
Actuary
Lai has a background as an actuary and recognised early on that the modelling skills of actuaries can be an asset when developing climate change policies. She found several initiatives were already underway in the sector and got involved in educating the public on environmental issues.
“I volunteered with the sustainability board of the UK Actuarial Profession and I was the digital co-lead for a sustainable finance newsletter that goes out on a weekly basis,” she says.
“But recently I handed that over to the volunteers that we’ve trained up as I’ve moved on to what is called the Actuaries Carbon Collaboration. We’re looking at carbon pricing and doing a bit more modelling.”
We're generally not in the market to trade; we are looking at the longer term and so from a return perspective being aware of the transition makes a lot of sense both from the perspective that there is no point to have plenty of cash if you don’t have somewhere to live, because your home is underwater or otherwise devastated by climate change, and that sectors and technologies that can help manage the climate transition are more likely going to have good returns over the longer term
Having trained as an actuary, Lai has worked for a number of insurance companies in Asia, including HSBC Insurance and Prudential plc. She credits these roles with instilling in her a sense of what it means to truly be a long-term investor.
“I was the CIO for HSBC Insurance [for Greater China], which manufactures predominantly insurance products, so the assets we managed generally had a long horizon. This is also something that I identified in St. James’s Place in terms of its investment horizon. We tend to advise our clients on what their life goals are and on planning for retirement,” she says.
“This means that we’re generally not in the market to trade; we are looking at the longer term and so from a return perspective being aware of the transition makes a lot of sense both from the perspective that there is no point to have plenty of cash if you don’t have somewhere to live, because your home is underwater or otherwise devastated by climate change, and that sectors and technologies that can help manage the climate transition are more likely going to have good returns over the longer term.”
Engagement or Divestment?
Environmental, Social and Governance (ESG) issues have received increasingly more attention in Asia in recent years and to find out where investors stand today, St. James’s Place commissioned research into the current opinions on sustainable investing.
The report, “Wealthy, Healthy Planet – The Power of Personal Wealth in Sustainable Development”, surveyed the opinions of over 2000 investors in Hong Kong and Singapore in February and March this year.
It found 64 per cent of investors in Singapore say ESG and sustainability are now factors in how they select investments. In Hong Kong, this percentage comes in at 61.
There's still quite a lot of capital around that wouldn't necessarily look at divestment. Therefore, we believe that engaging with companies to transition is arguably more effective in this climate emergency versus just walking away and allowing these companies to continue in their old ways when they continue to receive investments from those who don’t believe in divestment
“The results are generally quite positive. But then only 37 per cent [of Hong Kong respondents] said that they were willing to divest. That leaves another 63 per cent that would not and generally that is the case in the market,” Lai says.
In Singapore, the survey found investors are more willing to divest, with 50 per cent of investors indicating they are prepared to actively divest from companies that do not operate sustainably.
But, again, it also means the other half doesn’t think this is the best strategy.
“There’s still quite a lot of capital around that wouldn’t necessarily look at divestment. Therefore, we believe that engaging with companies to transition is arguably more effective in this climate emergency versus just walking away and allowing these companies to continue in their old ways when they continue to receive investments from those who don’t believe in divestment,” Lai says.
SDGs
The Paris Agreement-derived target of net zero emissions by 2050 in combination with the United Nations’ Sustainable Development Goals (SDGs) have quickly become investors’ preferred metrics against which to measure their progress in sustainable investment.
Lai says St. James’s Place is currently in the process of assessing how its investments measure up against these goals.
“Very helpfully, the PRI (Principles for Responsible Investment) has written a paper last year that talks about a five-part framework for investors to set policies and targets that align with the SDGs. That’s certainly something that we are using when we’re mapping our investment strategies to the goals,” she says.
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[i3] Insights is the official educational bulletin of the Investment Innovation Institute [i3]. It covers major trends and innovations in institutional investing, providing independent and thought-provoking content about pension funds, insurance companies and sovereign wealth funds across the globe.