Ashim Paun is Global Co-Head of ESG Research at HSBC. He will be one of the speakers of our next event (13-14 October 2020).
E4SM: Tell us about how HSBC Global Research integrates ESG…
Ashim Paun: We’ve had a team focussed on climate change for around 12 years – this was the team I joined in 2014. Since then we’ve built out broader ESG capabilities.
As a team, we approach ESG research in a number of ways. Lots of thematic research, on a range of themes, covering issues including healthcare in the US, plastic pollution, clean energy, fast fashion and questions of financial governance. And we work closely with other strategies – equity sectors, credit and economics – to integrate our sustainability ideas in how other teams cover their areas.
E4SM: How do you seek to understand climate change, from a markets perspective?
Ashim Paun: In the climate space, we have three main approaches.
First, analysis of policy catalysts, which could include UN talks, or an EU carbon border adjustment tax, or a sector regulation such as covering shipping or aviation, as examples. Second, we use modelling, for instance in creating energy system scenarios and in our evolving multi-factor analyses of country level climate resilience. Third, our proprietary climate solutions database allows creation of stock baskets giving thematic exposure, for instance to the idea of a clean transport transition or smart cities. Lastly, we work to integrate our thinking into the valuations of covering analysts.
E4SM: Why is transport so much in focus at the moment?
Ashim Paun: This century the focus has been on decarbonising power generation, with policy targets and subsidies creating the scale for solar and wind power which has led to rapid cost declines and, in some countries, substantial penetration of the capacity mix. But decarbonising power isn’t enough to meet the global warming limits targeted in the Paris Agreement, so we need to look at where else we can achieve substantial emissions decline. Many human activities which generate greenhouse gas emissions are technologically very complex to decarbonise – such as steel, cement, petrochemicals, agriculture – and so the focus turns to clean transport. Broadly speaking, this involves replacing oil with alternatives, including hydrogen and electricity.
And then air pollution in cities is the other driver – as we increasingly understand how dangerous pollution is to health, we need alternatives to the internal combustion engine…
HSBC: Why do you do this job?
Ashim Paun: I’ve worked on environmental issues for much of my career – in the public, not-for-profit and finance sectors. Environmental sustainability is the overarching ideology which drives me. I think all stakeholders are important in effecting change and addressing many of the challenges we’ve created around the world. And there is huge potential to effect positive change through responsible investment and sustainable finance. That’s what motivates my work at a bank that is committed to helping drive change in this area.