Svetlana Stoilova, pictured above, of SPG Partners discusses the rise in ESG investing can help bring about important global change and how The Bahamas can play an important part for both companies and individuals looking to build their investment strategies.
When the going gets tough, the tough get going. And we are going in the direction of unlocking $12trn worth in market opportunities in agriculture, energy and city planning; critical to delivering the UN Sustainability Development Goals.
Despite the tragedies Covid-19 caused, it has undoubtedly allowed us to clearly strategise for the future we want. Our company wants to do its part in positively impacting economies and industries on a global scale. The clients we represent are active investors and corporations that not only want to establish their legacies but also want to share the responsibility of creating better ecosystems.
Despite the tragedies Covid-19 caused, it has undoubtedly allowed us to clearly strategise for the future we want. Our company wants to do its part in positively impacting economies and industries on a global scale."
Speaking of ecosystems, both The Bahamas and the Middle East hold very special places in that of SPGs.
The Middle East, because we have observed their tremendous ups as well as some downs to be able to navigate smoothly, and implement ambitious yet realistic strategies; and The Bahamas for their unprecedented support and ability to foresee global wealth trends.
HH Sheikh Rashid al Maktoum, the father of the current Dubai Ruler, was many times asked to reflect on the region's stability and its relationship to oil. He famously said ‘my grandfather rode a camel, my father rode a camel, I drive a Mercedes, my son drives a Land Rover, his son will drive a Land Rover, but his son will ride a camel'. The eerie prophecy has been following the MENA region like a cloud; they're faced with the pressure of offloading their product in a global environment that is increasingly more concerned about our planet.
Whether or not we believe activists like Greta Thunberg or think she is George Soros's puppet, it doesn't really matter - the world is seeking solutions to our global problems therefore the region has to too! Having said that, Arab nations haven't fallen in the complacency trap just yet.
We take honour in having learnt valuable lessons directly from the late Sheikh's closest advisors, who were part of his visionary ideas to push for new policies; we know first-hand his philosophies remain embedded in the next generation who are eager to tap into the sustainability market.
HH Sheikh Rashid showed incredible foresight in making sure their billions buy modern infrastructure, latest communication, resorts and a financial centre.
The Bahamian Government once said no-one wants to do business with a country whose infrastructure is run down - seems their thinking is aligned as The Bahamas allocated record amount of money for improvements to ports, roads, bridges etc. The new Lynden Pindling International Airport in Nassau has been ranked as the second Best Airport in the Latin America and Caribbean region!
However, the Middle East has not gone too far astray; before discovering oil, Dubai was a port town interconnecting the Gulf to the rest of the world; a similarity to The Bahamas on the other side of the planet.
Free Trade Zone
Since first spending millions on the Free Trade Zone in the harbour of Jebel Ali, it has become an important business hub with market access to 3.2 billion people - a staggering amount for the little port city, which is not playing catch-up any more. Another similarity to The Bahamas is its access to the Americas and its Grand Bahama Free Trade Zone, which is superior to any other similar location in the region as it offers long-term tax concessions and benefits for financial, commercial and industrial enterprises.
The Bahamas and countries like the UAE (whose nationals travel visa-free to the Bahamas and vice-versa) have entered into numerous agreements, so herein lies an opportunity because every bit of cooperation is a catalyst for further trade and ventures between the two nations. One of the agreements aims to reduce The Bahamas' dependence on fossil fuels and increase trade between the two countries. Last year The Bahamas inaugurated a solar panel car park funded by Abu Dhabi Fund for Development (ADFD).
The area with the greatest scope for growth is sustainability and impact investment. The Bahamas has leverage purely from their geographic position and access they provide to the US (and US securities). Their ability to deliver financial services to the highest of standards makes them stand-out to the Arab countries which can greatly benefit.
What we know from our experience in the Middle East is, particularly amongst GCC countries, while each one has its distinctive traits, their global objective remains united - they want to put their cash to good work for the prosperity of their nations so let's make sure we are all stakeholders of the process!
SPG are engaged in projects that aim to impact and positively disrupt the world around us. Sustainability is almost always at the core of the development work we do - from building eco-cities, to assisting family businesses be governed to make room for the next generation, we are concentrated on the long-term trajectory and are extremely passionate about profit with purpose. Where we believe The Bahamas can add value to our Middle East tactics is making its financial services infrastructure available and better known to the right decision-makers within the region.
The Middle East rather than relying on luck, are trying to create theirs - maybe checking to see whether the cloud I mentioned earlier can instead cultivate some new harvest for future generations?
There are major upcoming events in the MENA region, further highlighting their importance on the global scene but also their desire to bring together business interests from around the world. God permitting we can travel by November, the G20 Summit in the Kingdom of Saudi Arabia has all its discussions directly related to sustainability; in one instance it highlights that KSA will continue the efforts of the Japanese G20 Presidency to advance talks of our oceans' ecosystems. The $12 trillion market is becoming to look increasingly real.
Sure, it can be met with scepticism, but in our experience with clients from the region they are actively engaging with their respective governments, partnering to cultivate sustainability-driven developments and sticking to the agenda.
Attention to climate change is not just ‘trendy' as many countries in the Middle East realise its inconceivable domino effects. A lot of MENA Government officials and diplomats I have spoken to say that the standard of living some Middle Easterners, especially from the Gulf, are accustomed to is simply not maintainable; they are afraid their countries have become welfare states.
Furthermore, we all know that the local conflicts have led to mass migration and refugee crises that not only affect the region's defence policies but strain infrastructure; add further migration due to climate change on top of the existing pressure and we see why the G20 are so fixated on sustainability.
Profit for purpose
Profit for purpose is our sweet spot. The wealth created nowadays is at unprecedented levels, so the responsibility factor is extreme. We work with corporate clients who can benefit from government mandates (or vice versa) so often we find ourselves negotiating to unite a number of interested parties into executing the same vision.
We are actually extremely careful as to what we call a sustainability investment; there are many ventures out there that have great potential but essentially it boils down to an investment in people.
Currently we represent a consortium, of which we are also a stakeholder, in securing partnerships with government organisations in a few Middle Eastern countries with the aim of developing local aqua and agriculture projects. We ask ourselves ‘Sustainability is becoming mainstream but is it moving the needle'?
The fact that the G20 Summit has outlined the importance of fostering resilient water systems is extremely reassuring and is wave worth riding for multitude of reasons.
Another recent SPG undertaking is the review of operations of a large resort developer who want to enter the eco-tourism space. We assisted them in acquiring the land and have taken the approach to look at this eco resort from both ends; on one side making sure it fits the sustainability bill while ensuring we build it into an investment product with a solid proposition to back it up.
We have been on board our partners who specialise in developments like the treatment of sewage water or building sustainable infrastructure around plots of land to be used for agriculture as part of the resort. It supports local labour and local economy while crucially achieving a global goal that is aligned with the mission of all the parties involved - namely sustainability.
Frankly, we can work with any offshore jurisdiction but we have witnessed the Bahamian professionals and their government's desire in facilitating business by ensuring their legislation is robust without diminishing the integrity of their financial system or the law. The Bahamas is in a position not only to offer sophisticated structuring to wealthy individuals from the MENA region but also to contribute their expertise and professionalism to more Public-Private Partnership scenarios, which SPG has been developing.
We are all activists and we are all here to do our part in order to manifest the visions we have for the world around us. There is an unbelievable amount of room for growth as we are no longer at the exploration phase, rather we are making sure we see the needle shift.
Positioning the Bahamas and its hub as a partner to these Middle Eastern nations controlling some of the biggest sovereign wealth funds is a solid starting point.
The private sector is about to do a lot more than philanthropy.