Macquarie pushes into new frontier of sustainability

To coincide with the “code red” warning from the recent major UN scientific report, we’re talking about Macquarie Bank’s Green Overhaul in this article.

There’s been a lot going on lately and we don’t want to shove this super-important topic aside. Sorry to bum you out but human activity is changing the climate in unprecedented and sometimes irreversible ways. But a catastrophe can be avoided if the world acts fast. 

Our global banking sector has been under increasing pressure to operate more sustainably and be more transparent about its economic, social and environmental impacts. 

We all know businesses listen to money so by the power of people choosing green companies to stash their money, it helps determine the kind of world we want to live in. 

​​”If we’re not moving capital for sustainable purposes, we’re not going to have a sustainable society” - Michael Eckhart, Former Global Head of Environmental Finance, Citigroup.

Macquarie Asset Management’s focus lately has been on a green overhaul of its $560 billion portfolio, deploying its $30 billion cash reserves to create the scale of change that’s needed. 

Sharing intel on its plan to go green within the next 18 months, the fund giant had already hashed out environmental and social plans for a quarter of its entire range of portfolio companies.

“This is a good era for asset managers who really do realise that actually, yes, we need to deliver returns, but we can be and should be more than that,” said Ben Way, MAM’s Hong Kong-based global head.

“We’ve been doing literally hundreds of sessions in our portfolio companies, training people, having a discussion, doing it in multiple languages, using materials that are culturally relevant and appropriate in the particular markets that we’re in,” Mr Way

Macquarie has undergone this significant shift which now includes a 2040 net zero emissions target for any company it owns, to meet the demand of customers making conscious financial decisions to not invest in climate change-causing activities. 

​​Last month, the investment bank and fund manager said it would lower its annual dividend payout (to 50 to 70 per cent of its net profit) to divert cash to grow its business. The bank has been building on its cash reserves of $30 billion and targeting renewables, energy transition plays, digital infrastructure, transport, waste and circular economy. 

The market is pretty competitive at the moment with a crowded field of buyers due to cheap money and the popular demand for environmental, social, governance (ESG). More and more banks have recognised the need to integrate ESG factors into their investment, lending and project finance decisions. 

Macquarie endorsed the view of ESG that applying the sustainability metrics tended to identify companies with stronger and longer-term prospects. They also believe that the business models and value of those assets meant they have fewer challenges fr