"Sustainability was always around people, planet and profit. I just think for the longest time we've forgotten about the people," said Mikkel Larsen, chief sustainability officer at Singapore-based DBS Group Holdings Ltd., in an interview for the latest episode of "ESG Insider," an S&P Global podcast.
In the coronavirus pandemic, Larsen said, "We've been reminded that you can't have one without the two others."
Larsen said the pandemic has brought social issues to the forefront as companies grapple with the way they treat their employees, customers and those in their supply chains.
"What we now see under COVID-19 is that companies who don't take [care] of their employees will not have a sustainable company to run," he said in the interview.
In Asia, where millions live in abject poverty, Larsen cautioned that the climate agenda cannot come at the expense of people. DBS stopped financing coal-fired power plants, but only after finding price-competitive renewable energy alternatives.
"We were not willing to accept that lack of electricity — we are in Southeast Asia where 65 million are still without electricity — was necessarily going to be the trade-off," Larsen said.
In other industries, such as aviation and cement, good alternatives are not yet clear. But Larsen said banks like DBS can take steps to help clients transition to more sustainable business models.
"I think the right thing to do is to back those that are taking the right steps to decarbonize," he said.
Larsen expects rapid growth in ESG investing in Asia. He said this is partly due to growing investor demand and partly due to rising pressure from regulators in the region.
"You've seen around Asia a number of regulators stepping up, and they're not deterred particularly by the COVID-19 crisis," he said. "Introduction of carbon taxes, introduction of incentives for going green, requirements for banks to show how much of their book is 'green' and 'brown' ... China's ability to offer a discounted rate at the discount window if you have green assets — all these things will spur the movement."
The episode is part of a series of podcasts exploring how banks in different parts of the world are adapting their environmental, social and governance strategies amid the coronavirus pandemic. DBS is the largest bank in Southeast Asia. In the last episode, we heard from JPMorgan Chase & Co. Head of Sustainability Marisa Buchanan about how the largest U.S. bank is responding to systemic racism and re-upping its focus on climate change following pandemic disruptions. In the next episode, we'll hear from some of the largest banks in Europe about their ESG approach.