Ready to Invest in ESG? Experts Convene to Provide Indispensable Guidance on Opportunities and Risks

December 16, 2022

Watch the event highlights here.

In recent years, ESG investment is becoming a new trend in global asset allocation and receiving more and more attention from capital market participants. It is an investment concept that considers economic, environmental, and social benefits which establishes an essential criterion for investors to measure the ability and quality of business development.

As Jack Hsu, CBS '98, Founder and CEO of Ivy Group International, Inc., introduces at the beginning of a panel discussion hosted by the Columbia Global Centers | Beijing, "35 trillion USD worth of investment assets has been put in the ESG fields and categories." Hsu's words indicate the great potential of the massive market of ESG investment.  

However, for some companies and institutions, ESG investing is still a concept and strategy in question and flux. Is it possible for ESG practices to generate real value for companies when making social contributions? What are the global ESG market trends, and how to invest in the era of climate change?

The Beijing Center, in partnership with the Tamer Center for Social Enterprise at Columbia Business School and Columbia University Press, invited scholars and senior investors to bring in insider insight and exchange opinions on practical and actionable measures and plans for investors in a recent panel discussion.

Lane Zhao, who founded InnoVision Capital, brought his professional opinions from an industry practitioner's view. Zhao identified several "ESG investment targeted areas," including electric vehicles (EV), solar energy, and wind power. He sent a positive message——the whole ESG industry presents a great opportunity and tends to yield lucrative returns.

Adding on Zhao's opinions, Stefen Shin, the manager of the Banking Department of the Investment Operations Region 2 at the Asian Infrastructure Investment Bank (AIIB), noted that all impact investments usually have good ESG measurements to them. 

However, on the other side, Shin reminded audiences that not all ESG investments have an excellent impact measurement. Responding to controversies of ESG's evaluation, he encouraged investors to invest in the long term to ensure a long-lasting positive impact. Shin combined his work experience with personal reflection and raised some interesting points regarding AIIB's bilateral relations with companies and institutions and how it loans money.

As a Professor of Professional Practice and the Elizabeth B. Strickler '86 and Mark T. Gallogly '86 Faculty Director of the Tamer Center for Social Enterprise at Columbia Business School, Bruce Usher provided audiences with distinct perspectives. He showed them why ESG investment is a double-edged sword.

Usher explained some common risks of ESG investing and said that climate change risk is most associated with transition risk. He detailed to the audience various possible transition risks for different stakeholders. For example, when governments pass laws trying to tackle the climate issue, policies may affect businesses in many ways, and companies will face policy risks that will negatively affect businesses. Moreover, if companies push out new products in response to climate and environmental issues, the fierce market competition may force some of them to slowly lose market share, which indicates the innovation risk. 

More than 700 audiences attended the online panel discussion and one of Columbia's students raised a question to the panel——how can a university student participate in ESG investment opportunities?

Zhao suggested taking some of the trending "ESG investment targeted areas" as a focal point and trying to research as much as possible, getting some public information, and talking to professors and professionals who have already been working in those areas for a long time for experiences and expertise. He also encouraged students: "when you have a rather comprehensive understanding of the ESG industry, why not try to find an internship or job to gain more hands-on experience?"