Fleet Financing

Grab and Gojek commit to ‘zero carbon’ ahead of public announcement

SINGAPORE / JAKARTA – Southeast Asia’s largest ridesharing and delivery superapps, Grab and Gojek, have pledged their commitment to net zero carbon emissions, leading tech startups in the region to adopt ‘environmental, social and governance (ESG) objectives.

From July 14, Grab in Singapore launched a new service that allows users to flag down a hybrid car or electric car for the same price as its regular carpooling option. This is one of the company’s latest initiatives to promote environmentally friendly transport systems.

In its first ESG report released last month, Singaporean company Grab said it was aiming for a “net zero carbon future” through various measures, including the adoption of electric vehicles in its fleet, as well as reforestation programs. . . . . He did not set clear targets in the report, but said he would announce science-based net zero carbon targets and a roadmap next year.

“As we intend to become a public company, we are strengthening our commitment to high levels of transparency and accountability in sustainability reporting,” wrote Grab CEO Anthony Tan and co-founder Tan Hooi Ling in the report, referring to his plans. to go public in the United States later this year.

Indonesian Gojek, half of the newly formed tech conglomerate GoTo, became one of the first Southeast Asian startups to openly set ESG goals when he announced his plans in late April.

A cornerstone of its plans is the commitment to produce zero carbon dioxide emissions by 2030, which will involve turning all of its fleets into electric vehicles. The startup is also committed to producing zero waste, starting by managing the use of single-use plastic in its ecosystem. His commitments will also apply to Tokopedia, with the two companies merging to form GoTo in May.

“There is an urgent need for the private sector to take action and help tackle the most critical environmental and social issues,” said Andre Soelistyo, CEO of GoTo, when announcing the plan. “As Gojek continues to grow in size and strength, with millions of people relying on our platform daily, we have a responsibility to do so in a sustainable manner. GoTo also plans to go public later this year.

Reports from Grab and GoTo – which also cover other non-financial areas such as the empowerment of small businesses, the safety performance of their transportation services, and the diversity of the workforce – show that tech startups Southeast Asia are starting to embrace ESG concepts as they grow and become more essential to society.

“We are always at the start,” said Patrick Cao, president of GoTo, during a webinar on June 29. “But the awareness is there.”

Among other startups, Singapore-based Carro, one of the region’s largest online auto markets, launched low-interest auto loans on July 1 to support the adoption of hybrid and electric cars. Hong Kong-listed Singaporean gaming hardware maker Razer recently set up a $ 50 million “green fund” with its first investment in a Singaporean eco-friendly home care startup.

ESG concepts – often used as metrics to measure a company’s risks outside of a financial accounting framework – emerged in the 2000s. They gained more attention throughout the COVID-19 crisis as people have become more concerned with the sustainability of businesses in the post-pandemic recovery, startups – which face less pressure from public investors – are also following the trend.

In Southeast Asia, where developing economies are dominant, many startups are already naturally embracing certain ESG elements in their businesses, such as electronic payment services that help with financial inclusion.

“Typically, tech founders and investors are more familiar with ESG concepts as they came to the fore at the same time these millennials were starting up,” Justin Tang, head of research Asian at United First Partners in Singapore. . , highlighted.

Southeast Asian-focused venture capital firms have also factored ESG factors into their investments.

“ESG considerations have been introduced into our investment process and will remain a key factor in our portfolio management,” said Susli Lie, Venture Partner at Monk’s Hill Ventures, based in Singapore. “We have started to proactively identify ESG risks and opportunities during the investment process and will actively manage them throughout the life of the investment.”

Lie told Nikkei Asia that other investors joining his funds are also aware of this. “Expectations regarding the integration of ESG factors into investments have increased in recent years. “

East Ventures in Indonesia said it values ​​companies that contribute beyond the economy. “It’s great that we operate in Indonesia and almost all of the portfolios [companies] have social impacts, ”said Melisa Irene, venture capital partner. “Software as a Service [startups] improving the productivity of micro-SMEs, e-commerce and the market increase access to affordable products, ”she said.

She added: “ESG is standard practice in companies and we are taking steps to ensure that ESG is strongly integrated into our investment process.

Major Asian financial institutions have already taken ESG elements into account, effectively helping to propagate the trend in the region. Singaporean company DBS Group Holdings announced in April measures to achieve zero exposure to the thermal coal sector by 2039. In June, Japan’s Mitsubishi UFJ Financial Group tightened lending rules for coal-fired power plants, prohibiting the funding of expansion of existing facilities.

Besides environmental initiatives, there are other areas that startups should also pay more attention, such as corporate governance. The work environment for employees has also become more important, after the culture of overwork in some fast-growing tech companies in China was brought to light. There are also calls for better treatment for workers in the “concert” economy, such as taxi drivers.

One obstacle for young startups is that taking ESG factors into account in their operation can be costly or cumbersome. But Tang of United First Partners pointed out that a company can start ESG activities at any level and move towards full compliance.

“In fact, a good understanding and implementation of ESG principles will reveal it as a stepping stone to growth rather than a hindrance,” he said.

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