Environmental Finance: ‘We’re seeing more brown discounting than green premiums’ in Asia, says Actis

James Magor, Director, Sustainability at Actis, was interviewed by Jennifer Forrest of Environmental Finance for a piece on the impact of sustainability on value. Click here to read the full article or read on below for some of James’ comments.

James Magor, Director, Sustainability at Actis, said:

“We’re perhaps seeing more brown discounts instead [of green premiums], whereby buyers might not pay more for green credentials, but they will pay less if it is not sustainable.

[On Actis’ investment into, development and exit of An Phat 1 Industrial Park in Vietnam] “We conducted the green design review to identify opportunities to optimize the design and brought in specialist sustainability advisers. The initial concept design included a lot of hard surfacing that we replaced with green or natural surfacing and landscaping, for instance, and natural boundaries as opposed to hard fencing.

“We also improved the sustainability credentials of the common resources, such as street lighting and water treatment. All of which provided a cost saving to optimise the CAPEX and OPEX.

“We reduced the development costs, and we were able to exit successfully because of the high demand for green industrial parks.”

[On data centres] “Based on our experience with electricity distribution company investments, we appreciate the complexity of integrating intermittent and distributed renewable energy sources into an energy system and the vital role digital technology has in enabling that to happen.

“Our investment in data centres is quite recent, and so we’re not looking at exiting those investments any time soon. We therefore don’t have the body of evidence, but I would suspect that buyers are pricing-in sustainability into valuations.

“We’re certainly seeing banks and lenders pricing in sustainability into financing and charging more for non-sustainable businesses to access finance.”