With more investors focusing on environmental, social and governance (ESG) issues, the clean technology sector is booming in Asia. While the debate continues on how committed China is to becoming ‘green’ or whether the growth of solar PV manufacturing there is for domestic use or export, the fact remains that in 2010 China invested more money in clean technology than the US.
What is clean tech?
‘Clean tech’ refers to the diverse range of products, services and processes that harness renewable materials and energy sources. This Goliath umbrella term includes renewable energy sources (such as solar, wind and biological power), and renewable fuels (such as biomass, bio-diesel, hydrogen fuel, coal gasification) as well as agriculture, water and waste management.
With a market value of more than US$200bn in environment protection and renewable energy alone, China undoubtedly has the largest clean tech sector in the world. The industry continues to grow at about 20 per cent a year. And as government spending on clean tech has snowballed to 1.5 per cent of GDP, so too have investors followed.
What this means for financial services
According to a fund manager at one of Europe’s leading clean tech investment funds, stocks in the sector are on the verge of a major bull run that could deliver sizeable returns for investors
The encouraging long-term growth prospects of many clean tech firms, coupled with climate change risk and environmental legislation, make these stocks particularly attractive.
What this means for recruitment
In what was previously a niche market, clean tech has rapidly gone mainstream. And over the past year there has also been an increase in dedicated teams covering the sector within financial services firms. This has led to a recruitment drive across M&A, corporate finance and equity research teams in investment banks and private equity firms in Asia, including houses such as HSBC, Daiwa and Samsung Securities.
Attrition rates in areas such as equity research have gone up accordingly, and competition to hire the best analysts has seen some attractive packages on offer in Asia.
Although embedding ESG within organisations is admittedly at the beginning of its life cycle in Asia, there have still been some significant moves in the last 12 months. These include HSBC’s Xavier Desmadryl – who moved from Paris to Hong Kong as global head of ESG research and PRI in November 2010 – and Clarence Yang, who heads up corporate governance at BlackRock.
BNP Paribas Investment Partners is another firm that has boosted its Asian socially responsible investment (SRI) capabilities, having moved portfolio manager François Perrin from Europe to Hong Kong in May to lead its equities team.
For young people who are entering M&A or corporate finance, clean tech and SRI could represent a huge career opportunity.
James Incles, regional director Asia Pacific, Wilbury Stratton