Worthwhile to invest in sustainability: Surbana Jurong

Singapore

IT'S a cost that needs to be incurred sooner or later, which is what makes sustainability a zero-sum game, says Surbana Jurong's group chief executive Wong Heang Fine.

Noting that there has been several flooding incidents of late due to torrential rain, Mr Wong tells BT in an interview that this is not because Singapore's infrastructure is not designed for it, since it was designed according to what he calls "operating conditions".

However, rainfall patterns have shifted since then, due to the ongoing climate crisis, leading to far more intense downpours than usual during a given period of time. Such anomalies have not been taken into account in the design of Singapore's current infrastructure, he says.

"If you don't look at a temporary way to store all this rain water, it will cause flooding and it will destroy assets - there's a cost to that," says Mr Wong.

Investing in measures to protect assets is thus a worthwhile endeavour, since not doing so incurs a cost anyway, he says.

"It's a matter of whether you finance it now and help to mitigate the flood, therefore enjoying the premium for the next maybe 99 years," he says.

But the top hurdle for many companies considering pursuing a sustainability agenda is still cost, says Mr Wong.

"My view of it is that it's going to be a norm, so whether you like it or not, every firm needs to think about it," he says.

This is why Surbana Jurong also takes it in its stride to help its clients think of ways to finance or raise funds to pay for these costs, he says.

In February, Surbana Jurong priced a S$250 million public sustainability-linked bond due 2031, the first of its kind from a South-east Asia-based company to feature a premium step-up structure at maturity.

The proceeds from the bond are to be used to fund the consultancy firm's future growth, refinance existing credit lines and provide working capital.

If its sustainability goals are not met, the company will pay investors a premium payment of 0.75 per cent of the redemption amount at maturity.

For example, it has pledged to achieve net zero carbon emissions at its headquarters Surbana Jurong Campus by 2030.

The bond has drawn strong interest from institutional investors and private banks internationally, including those from Asia, Europe and the United States, with the offering more than six times oversubscribed.

Mr Wong believes setting "hard targets", such as a severe cash penalty, is one reason the bond appealed to so many overseas investors, alongside their growing interest in impact investing.

Mr Wong sees the bond issuance as Surbana Jurong's way of setting an example for the industry, demonstrating to their clients that there is a way to drive financing costs as long as they have focused sustainability targets.

"It really signals a deep commitment for us to achieve those goals, and it's not an easy goal," says Mr Wong, adding that he hopes this could spur clients to think in a similar way.

"For us to design so that our clients can achieve those sustainability goals, we need to make sure that we can demonstrate to them that there are ways to fund those things that they want to do," he says.

Another challenge though is the ability of companies, including their clients, to adopt new technology that can help mitigate the impact of climate change, says Mr Wong.

This is where the government can, through a public-private partnership, play a part to offer incentives that can help offset the risks associated with adopting new technology, he says.

While companies should plan for an eventuality like climate change, it is as important to be prepared for unplanned events.

And the importance of such resilience has really been brought to light by the ongoing Covid-19 pandemic, Mr Wong says, challenging companies to think about whether their business model is sturdy against unforeseen events.

He believes the pandemic could leave an imprint on the design of future buildings - for example, by installing features to make contact tracing easier - just like how past crises have influenced the way things are being done now.