Supporting multinationals to uncover ambitions in Asia
Citi views sustainable financing as both a mandate and an opportunity to partner clients in their ESG journey.
In recent times, stakeholders of firms across the board such as shareholders, employees and their customers are demanding ESG-led value creation. According to analytics firm S&P Global, shareholder activism gained momentum in 2021 and saw votes against directors for lack of credible climate action plans. The trend, which is set to continue in 2022, is placing pressure on firms to raise corporate standards.
According to a 2021 Citi survey conducted among 259 institutional clients in 14 markets across Asia Pacific to better understand their ESG priorities, sustainability is gaining momentum in this region. 54% of the respondents said they already have ESG policies and practices integrated in their organizations’ corporate strategy while close to 90% of the remaining respondents intend to roll out ESG policies and practices within five years.
When asked how Citi is helping corporates transition to a ‘green’ portfolio, Stella Choe, Asia Pacific head of Citi Global Subsidiaries Group (GSG) which serves 90% of Fortune 500 companies operating outside of their home countries, explained, “We provide advice to our investor clients on how best to transition their portfolios to sustainability focused asset classes. We also support many of our corporate clients in their transition to more sustainable business models and advise them on how they can create and manage effective ESG frameworks, access ESG-related financing and stay ahead of evolving regulations.”
Stella reiterated that when it comes to ESG, it is not just about the ‘E’ or environment. “While the effects of climate change are some of the most significant challenges facing humanity today, there are also social and governance considerations which are equally important.”
A case in point -- today, two-thirds of the world’s school-age children do not have Internet connection in their homes, according to a joint report from UNICEF and the International Telecommunication Union (ITU). With millions of students having to rely on virtual learning during lockdowns, the digital divide has further exacerbated inequalities in the communities during this pandemic.
“Citi’s commitment to sustainability is not just limited to its clients”, Stella emphasized.
In 2021, Citi announced ambitious plans of committing US$1 trillion to sustainable finance by the end of 2030, which includes investments in education, affordable housing, health care, economic inclusion, community finance, international development finance, racial and ethnic diversity and gender equality.
“On the sustainable finance front, our bank has made huge progress on this commitment”, says Stella. “Just last year alone, Citi raised over US$40 billion for our Asia Pacific clients from global and local capital markets,” she added.
Asia: A digital world of opportunities
Beyond ESG, Stella spoke about the digital potential in Asia, which is adopting technology at a much faster pace than other regions, opening up a range of opportunities. This trend is often why multinational companies (MNCs) look to boost their global subsidiaries in the region as part of their growth strategy. In fact, according to a recent report by McKinsey, in the decade before the pandemic, $1 of every $2 in new global investment went to companies in Asia—and $1 in $3 to China alone.
“Citi has made great strides in growing its digital offerings to support the ambitions of our clients. While digital innovation has been front and center for the bank for a long time, we are seeing new vigor to this trend”, she said.
Riding the wave in the changing tides of COVID-19
On the back of the pandemic, there has been major shifts in supply chains and this is driving demand for supply chain finance, an area where GSG has been actively supporting its clients.
Stella also continues to see opportunities for GSG in intra-Asia trade corridors. “COVID-19 has dramatically changed the strategy and focus of firms across the world but one thing remains – our clients continue to look for opportunities to expand their footprint across Asia’s trade corridors.”
In 2021, the bank’s client business from Taiwan to India shot up by 55%. From Taiwan to the ASEAN region, it grew 22% and from China to ASEAN, it went by 11%.
Based in Singapore, Stella has outlined her plans for the next two years, saying that her key priority would be supporting clients to thrive in the post-pandemic world.
“With COVID-19 hitting the reset button on the global economy, what has worked yesterday, may not work today. Putting our customers at the forefront of what we do is critical and as we continue to transform digitally to support our clients to come back stronger, it is important to bear in mind that successful digital transformation is not all about technology. It is about elevating our clients’ experience to the next level and removing friction from the customer journey, and this is high on my agenda.”