Progressive capital solutions tap into the future of sustainable businesses
The World Economic Forum (WEF) in 2024 has doubled down on its emphasis on sustainability and energy transition, calling for an urgent need to build new energy systems and phase out fossil fuel. This strategy aligns with the themes advocated at COP28.[1]
Against the backdrop of a potential economic soft landing as outlined by the International Monetary Fund,[2] notable industry figures from McKinsey echoed sentiments of optimism for 2024, stressing the imperative to fortify resilience and embrace sustainability practices, including the integration of ESG (Environmental, Social, Governance) into business strategies.[3] In this context, EquitiesFirst’s innovative financing solution, securities-backed financing, emerges as an instrumental tool poised to support investors in capitalizing on growth opportunities while advancing sustainability objectives.
Global push towards ESG integration
On a climate legislation level, the European Union’s European Green Deal has spearheaded private-public joint action, significantly enhancing European competitiveness with policies covering areas such as energy, sustainable finance and transport.[4] This initiative reflects a cross-sectoral alignment to drive sustainability and underscores the imperativeness for businesses to prioritize ESG in their decisions.
To better track and benchmark effectiveness of sustainability initiatives in companies, Bloomberg has developed the Government Climate Score Index,[5] which indicates how better sustainability profiles and higher ESG scores may result in greater recognition and support from investors and shareholders. The index ultimately underscores the value of ESG in corporate strategies and highlights how sustainability is not only a responsibility but can also be a strategic advantage in today’s increasingly conscientious market environment.
EquitiesFirst has long recognized the value ESG principles bring to listed companies and investors. In 2021, a series of whitepapers on corporate governance best practices in Asia Pacific was published in partnership with Nasdaq Governance Solutions. This initiative is designed to offer actionable insights on prevailing ESG trends, providing tangible value to both investors and management teams as they navigate the pursuit of long-term value creation for their enterprises. This commitment to delivering actionable intelligence aligns seamlessly with EquitiesFirst’s unwavering dedication to serving the needs of our clients and partners.
Opportunities and challenges in the electric vehicle industry
One sector that has experienced rapid growth within this narrative is the electric vehicles (EVs) industry, driven by its clear value proposition as a substitute for fossil fuel-powered vehicles, in addition to the economic benefits it brings to developing countries as highlighted by the World Bank, aligning with agendas at COP28 and WEF.[6] With a projected global growth rate of 22% in 2024, market participants are closely monitoring EV volume trends, particularly in emerging economies such as Thailand and India.[7]
The burgeoning potential of the EV automobile industry has attracted growing interest from businesses and investors, fostering healthy competition. Inevitably, securing financing emerges as a critical step in establishing a foothold in this dynamic sector. Tailored solutions such as securities-backed financing from EquitiesFirst could be pivotal in driving long-term value.
Global automakers are expected to collectively invest nearly $1.2 trillion through 2030 in the development and production of electric automobiles, and securing raw materials for batteries and other parts.[8] The industry’s commitment in energy transition and growth trajectory are further underscored by the doubling of investment levels in the EV market, surpassing initial estimations significantly.[9] With widespread interest in capitalizing on the expanding opportunities in this industry, non-traditional financing avenues offer a compelling alternative which empowers investors to participate in the sector’s growth potential and benefit from the transition to a more sustainable future.
Like all nascent industries, building electric automobiles is not without challenges. As highlighted in an S&P Global report, the mining of copper, an essential material for the manufacturing of battery-powered vehicles, is struggling to secure sufficient investment to support the transition[10] – an area where flexible liquidity is also in demand to fuel sustainable growth.
Minimizing risks while maximizing potential with securities-backed financing
EquitiesFirst specializes in securities-backed financing, offering tailored financing solutions to clients that offer liquidity against securities holdings. These financing options enable investors to access capital without the need for traditional loans or selling their assets outright. By leveraging their existing equity holdings, investors can unlock liquidity to seize growth opportunities in emerging sectors such as EVs while simultaneously addressing ESG considerations.
The non-purpose, non-recourse nature of capital solutions from EquitiesFirst promotes responsible investing practices by allowing investors to retain all beneficial economic ownership of the pledged collateral. This strategic approach ensures ongoing access to liquidity, reinforcing the dual commitment to financial growth and responsible investing.
[1] https://www.weforum.org/agenda/2024/01/everything-you-need-to-know-about-climate-and-nature-at-davos-2024/
[2] https://www.imf.org/en/Blogs/Articles/2024/01/30/global-economy-approaches-soft-landing-but-risks-remain
[3] https://www.mckinsey.com/industries/financial-services/our-insights/banking-matters/banking-matters-in-2024-a-live-take-from-the-wef
[4] https://www3.weforum.org/docs/WEF_Delivering_on_the_European_Green_Deal_2024.pdf
[5] https://www.bloomberg.com/professional/blog/indices-2024-outlook-sustainability/
[6] https://www.worldbank.org/en/news/feature/2022/11/17/electric-vehicles-an-economic-and-environmental-win-for-developing-countries#:~:text=A%20new%20World%20Bank%20report,on%20expensive%20imported%20fossil%20fuels.
[7] https://www.bloomberg.com/news/newsletters/2024-01-09/electric-vehicle-market-looks-headed-for-22-growth-this-year
[8] https://www.reuters.com/graphics/AUTOS-INVESTMENT/ELECTRIC/akpeqgzqypr/
[9] https://www.bloomberg.com/professional/blog/indices-2024-outlook-sustainability/
[10] https://www.spglobal.com/mobility/en/research-analysis/2024-automotive-materials-forecast-ev-batteriesand-more.html
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