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Asian conglomerate plans to jettison fossil fuel investments in ESG pledge

Fossil fuel investment factory
New World Development plans to jettison fossil fuel investments in ESG pledge

One of the world’s largest foreign director investors, the Hong Kong-based New World Development has vowed to divest from fossil fuel investments as part of its ESG future strategy, writes Fiona Keating

Adrian Cheng, the company’s CEO said New World Development will invest in renewables and net-zero carbon technologies. The firm has a target of 100% renewable energy on rental properties by 2026.

“While some of these commitments may seem like short-term financial tradeoffs, we have raised close to $2.6 billion through sustainable financing,” Cheng said at the Asian Financial Forum (AFF).

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“Through some of these deals, including the world’s first US dollar real estate developer sustainability-linked bond issued in early 2021, we’ve also been able to attract global ESG investors and reduce cost of capital.”

In 2021, the family firm (the third wealthiest in Hong Kong) issued $200 million 10-year US dollar sustainability-linked bond with a coupon rate of 3.75% to help it achieve decarbonisation targets at its property portfolio.

Sustainable development funding suggested by the United Nations is short by $2.5 trillion per year, says Cheng. He believes the funding gap can be attributed to the lack of standards and tax guidance, disclosure agreements and investment decisions.

In the New World Sustainability Vision 2030, plans include reducing energy and carbon emissions intensity by 50%, with key areas of focus including climate change, energy and carbon, waste, water and biodiversity.

The group’s existing investments in mainland China amounts to more than US$16.5 billion and looking to diversify. As a result, New World Development is taking a lead in green financing. The company issued its first green bond in Hong Kong worth $310 million for its Greater Bay Area projects.

In general, investors in Hong Kong do not rate ESG elements as high as investors in other countries. According to an attitude survey of Knight Frank’s Wealth Report 2021, only 38% of investors in Hong Kong said that the COVID pandemic had made them keener in ESG-focused property investments than they were a year ago.

Just 58% of investors in Hong Kong believed they had all the information necessary to properly calculate ESG-related investments, compared to a worldwide average level of 68%. 

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