In 2021, we identified the areas where we can focus our efforts and capabilities towards climate change with our 3-pronged approach.
· A 2025 Net Zero ambition for our operational carbon footprint
· Create positive impact through responsible investing
· Climate related action on insurance business
We will continue to take a progressive approach to enhance our climate reporting according to the Task Force on Climate-Related Financial Disclosure (TCFD) guidelines as part of our commitment to climate action.
In 2021, we set the target to achieve operational net zero emissions by 2025. To meet our goal, we have set the following priorities: Avoid or reduce emissions, use fewer natural resources and promote environmental responsibility across our network and ecosystem.
The process of tracking and minimising our carbon footprint has started in 2017. We conducted a study to estimate the overall operational carbon footprint in accordance to the GHG Protocol Corporate Standard in 2020. The following types of emissions are material to Great Eastern and we can assess them reliably and accurately:
GHG Scope 1 - Diesel consumption of backup generator
- Fuel consumption of company vehicles
GHG Scope 2 - Electricity consumption of own business operations
GHG Scope 3 - Business air travel by staff
Accordingly, targets have been set for main operating subsidiaries to reduce electricity consumption and scope 2 emissions. Key Principles are implemented across the entire Great Eastern network to ensure that we conduct our business in an environmentally conscious manner.
Key Principles to minimise negative environmental effects of our business include:
Setting a 2019 baseline for a 2025 Operational Net Zero ambition
2019 has been selected as the operational emissions baseline. We track emissions by absolute amounts of tCO2e (tCO2e) per Full-time Employee (tCO2e/FTE). Reduction targets by intensity is an important metric so that we can adjust for business growth over time.
In 2019, our operational emissions stood at 16,094 tCO2e. By 2021, operational emissions had reduced by 17% to 13,342 tCO2e. Emission intensity has reduced 20% (from 3.54 tCO2e/FTE to 2.81 tCO2e/FTE).
These reductions were a result of two key factors – (i) Various Group-wide initiatives undertaken during the period, and (ii) The COVID-19 impact of increased remote working and new ways of doing business.
We target to further reduce emissions per FTE by another 10% by 2025 by incorporating energy-saving features for our buildings in Malaysia and integrating environmental considerations in the upcoming office transformation projects.
We are exploring options to reduce energy consumption and emissions across the Group. When feasible, we will adopt the use of renewable energy for our office buildings. We plan to procure credible carbon credits to offset residual and unavoidable emissions.
The above plans and actions will enable us to achieve net zero operational emissions targets by 2025.
Resource utilisation - The paperless journey
It is an ongoing effort to digitalise paper-centric processes. In 2021, we achieved 39% in paper reduction from the baseline year of 2019. This is a 45% reduction from the peak volume in 2018.
• Digitalisation of documentation and communication via e-policy and e-correspondences for both financial representatives and customers. We are aiming for 80% digital adoption by 2022.
• To achieve more than 80% of electronic submissions and e-payments by customers by 2022, by promoting the use of our suite of online platforms.
We are aware that digitalisation can create a larger digital carbon footprint through the use of power and other resources. This – together with the overall impact of the business digital transformation - is being tracked and managed, and the carbon mitigation hierarchy will apply.
We embarked on the journey to ‘green’ our property portfolio in 2018 - starting with Great Eastern Centre and Nankin Row shophouses, and Great Eastern @Changi in the year 2020.
Great Eastern @Changi has replaced its chiller plant with a more efficient system. All of its lightings were replaced with energy-efficient LEDs and motion sensors were installed at key locations to maximise energy savings. The air distribution system and car park ventilation system were also optimised.
These efforts resulted in a 32% reduction to 850MWh/year in electricity consumption in 2021. This is equivalent to the annual electricity consumption of 180 4-room HDB flats and has reduced our operational emissions by 347 tCO2e per annum.
We were pleased that Great Eastern @Changi was awarded Green Mark Platinum by BCA in December 2021.
At Great Eastern, we seek to create a long-term positive impact through responsible investing. We believe that sustainable business practices will enhance long term financial performance and mitigate ESG risks. In 2021, we continued to broaden and deepen our ESG integration across all asset classes, and took concrete steps to address climate risks.
ESG is now a mandatory due diligence criteria in the scoring of external fund managers for both public (equity, fixed income) and private markets (private equity, real estate). Our managers are required to evidence ESG integration through internal policies into investment processes, or through being a UN-PRI signatory. We review each manager’s ESG progress at least annually, and initiate dialogue when manager practices and/or investment strategy do not meet our expectations. We are pleased to share that 100% of Great Eastern Singapore’s external managers have an ESG policy in place, and close to 90% of investible assets in Singapore are managed by UN-PRI signatories.
Through regular dialogue with managers, we encourage them to adopt leading ESG stewardship practices, such as actively engage investee companies to adopt sustainable business practices and improve corporate environmental disclosures. We have started to track investee-level engagements and proxy voting statistics where holdings are held directly in our name. We will continually strengthen our stewardship and engagement efforts as a responsible asset owner, and share our progress proactively and transparently.
For our Singapore funds’ public market assets (listed equity and fixed income), we have implemented ESG scoring and measurement of carbon metrics developed by an external vendor, MSCI. We are committed to maintaining superior portfolio ESG rating and carbon metrics relative to those in our investment universe. As of December 2021, the carbon footprint of Great Eastern Group’s listed equity portfolio is 125.8 tCO2e per million SGD invested, 5.7% lower than December 2020. Similarly, the portfolio’s weighted average carbon intensity of 193.7 tCO2e per million SGD sales presents an improvement of 11.6% from the previous year.
Our medium-term target is to reduce our listed equity portfolio’s carbon footprint by 20% by 2025 (base: 2020). Our strategy is to identify and invest in companies which benefit most from the transition to a low-carbon economy. These include companies that actively utilise and contribute to the development of current and future low carbon transition technologies; and those that rank ahead of peers in mitigating risks and exploiting opportunities offered by the climate change trend. In addition, we have formalised a decarbonisation roadmap which limits new investment into coal producers and coal-fired utilities with no credible energy transition plan. We have also incorporated relevant exclusions in our corporate loans portfolios Group-wide.
To date, Great Eastern has allocated more than S$1.6 billion to ESG investments, out of which S$380 million were made in 2021 and spanning across low carbon equity, green bonds and green loans. In 2022, we will incept at least S$800 million of low carbon equity and fixed income mandates with our investment affiliate Lion Global Investors (LGI), steadily increasing the proportion of our assets held in this area.
While measurement on our fixed income portfolios has commenced, data quality and availability remains challenging. We have not been able to identify a set of harmonised reporting metrics we could use across both corporate and sovereign bonds. Notwithstanding, we foresee these will abate over time with regulatory direction driving improved disclosures and common reporting standards. With a comprehensive climate analytics solution ready by Q1 2022, we will be able to perform more varied and targeted climate impact analyses on our public market portfolios, such as physical and other environmental risks beyond carbon, and potential impact under different warming scenarios. This would also enable us to provide enhanced disclosures in line with TCFD recommendations.
On the collaboration front, Great Eastern continues to actively contribute towards industry discussions and coalitions in driving sustainability issues forward. For instance, we co-led efforts at the Life Insurance Association (LIA) Singapore in survey contributions towards the 4th ASEAN Insurance Summit (“Building a more resilient and sustainable ASEAN”), and provided practical inputs at various rounds of MAS industry consultations and GFIT-taskforce discussions throughout the year. We have also partnered established external fund managers to provide internal ESG training for our investment personnel, and will continue to participate in external climate and ESG roundtables alongside like-minded investors to advance and share our knowledge and expertise in the journey towards generating long-term, sustainable returns.
Climate change will impact our insurance businesses. We provide life insurance protection to individuals over extended periods that can span several decades. The long-term impact of climate change – together with transitional costs and possible impact on asset value – are risks which we as insurers face and risks which our customers seek to mitigate.
In the General Insurance business, we have created a dedicated ESG Taskforce to design and implement the ESG strategy across the business. The team has embarked on an exercise to assess the likely impact of environmental risks and to formulate appropriate responses to climate change through the offering of appropriate products.
Environmental risks are difficult to manage because of the uncertainties and magnitude of impact. We are closely engaging with our regulators and reinsurers, and tracking research in the public domain to acquire a better understanding of the likely impact, in order to formulate suitable products for our customers. There is a lot more work to be done, with potential collaboration opportunities with other market players.
Product innovation – GREAT Green Single Premium (SP)
Besides looking at the impact of ESG risks on our business, we are also interested to learn about our clients’ response to sustainability and how we can serve them better. In 2021, we embarked on a customer survey to assess client interest in sustainable or green insurance products. The survey results indicated the existence of some interests from a growing number of customers who want to participate in sustainability outcomes.
In July 2021, we launched our very first green life insurance plan – the GREAT Green SP. It is a three-year single premium endowment plan offering competitive guaranteed returns backed by green investments. Great Eastern also pledged to donate a portion of the premiums to a sustainable cause.
As part of the sustainability movement to achieve a low-carbon economy, we launched our first green life insurance plan – GREAT Green SP in July 2021.
GREAT Green SP is a short term endowment plan offering competitive guaranteed returns backed by green investments. These investments include climate change mitigation financing projects and initiatives that support renewable energy producers, green buildings and deployment of electric vehicle.
In addition, we donated S$1,000 for every S$1 million raised from the proceeds of GREAT Green SP to a local charity, Zero Waste SG. This donation will support programmes to educate and advocate for the mindful usage of natural resources, driving towards a zero waste future and circular economy.
The plan was fully subscribed in days. $120,000 was raised for Zero Waste Singapore – a local non-government organisation to promote environmental advocacy and awareness in Singapore.