How I got here… National University of Singapore green finance academic Sumit Agarwal

Agarwal was appointed founding managing director of National University of Singapore (NUS)’s Sustainable and Green Finance Institute (SGFIN) in April, when the institute launched as an intelligence hub for the region’s sustainable finance community.

Besides his job running SGFIN, Agarwal is head of the real estate department at the NUS Business School. He is a Low Tuck Kwong Distinguished Professor of Finance, which is awarded to academics who have demonstrated excellence in finance, accounting or business strategy.

Agarwal has received numerous awards over his 11-year academic career for his research on financial institutions, behavioural finance, real estate markets, urban economics and capital markets. His work on the impacts of financial technologies such as digital payments on household finance won a 2021 Literati Award.   

Yet the 53-year-old, whose papers have been published in top-tier journals like the American Economic Review and the Quarterly Journal of Economics, is humble about his achievements. “Most of my time revolves around taking care of [my four-year-old son],” he says.

A co-author of the best-selling book series Kiasunomics, which investigates the economic behaviour of Singaporeans, Agarwal is a proponent of using incentives to change behaviour. At a post-budget roundtable discussion in 2022, he suggested that Singapore could create a carbon scorecard for individuals, which would keep emissions in check and identify people who would be eligible for a carbon rebate. 

In this interview, Agarwal tells Eco-Business about his career journey so far, the hardest thing about his job and academic freedom in Singapore.

What’s your education background?

Born in India, I was raised in Kenya, Tunisia and Uganda. I headed to the United States for college from 1989-1993, where I graduated with a Bachelor of Science degree in computer science. I later went on to complete a Master of Arts from 1993-1995 and a doctor of philosophy (PhD) from 1995-1999, both in economics. 

Part of the reason why I made the switch from technology to economics is because of my father, who worked at the World Bank. I was influenced by the thinking of the economists whom he brought home to visit.

My decision to complete all three degrees at the same institution, the University of Wisconsin-Milwaukee, was driven by my desire to be a source of support for my younger sister, who also enrolled there. 

You used to be a banker. Did you face difficulties switching to academia? 

My first job out of college from 2000-2006 was as a financial economist at the Bank of America in the US. In industry, the pressure was on for me to deliver quality work daily.

Luckily for me, I was on good terms with my supervisor. He allowed me to dedicate time to researching consumer behaviour and housing mortages for publication purposes. 

That was when I fell in love with research, and I took a leap of faith to switch to the Federal Reserve Bank of Chicago as a financial economist under the research department.

It was a mammoth task convincing the Federal Reserve Bank to hire me, a fledgling economist with industry-centric experience. They ultimately made the hire on account of the work that I did with the Bank of America. 

After working for the Federal Reserve Bank for six years from 2006-2012, I decided to move to NUS as I wanted to be in a purely academic environment. Again, it was an uphill battle. Even though I had research experience, I have never taught in my life, so they were wondering if I could get along with students in an academic setting.

Fortunately, the dean of NUS took a chance on me and I have been in academia since. In between, I took a two-year break from 2016-2018 where I taught at Georgetown University in the US, and realised that the university’s culture did not suit me. 

What are the key differences between academia and industry?

Academia affords more flexibility. In academia, I have the freedom to work on what I want when I want. There is also what you call a tenure [the right to keep a job permanently], so I can take more risks.

On the other hand, the private sector has a more structured environment. It’s a good place to be in if you’re not a self-motivated person. Although the salary ceilings in industry are very high, one also runs the risk of losing one’s job if the economy is not doing well, as with the case of the recent layoffs in Singapore’s technology sector in early 2023. 

What prompted you to move into sustainability?

It was the other way round. When I started out in academia, one of the initial ideas I had for my PhD thesis was to examine the economic impacts of overfishing in Uganda’s lakes. 

I was ahead of my time as people in the late 90s were not as environmentally conscious [as they are today]. Worried that my paper would not gain traction in the academic community, I wrote a dissertation on banking instead. 

When I became a tenured professor at NUS, I knew that I wanted to return to my first love: sustainability. In the past few years, I have co-authored several papers on sustainability, such as the use of behavioural nudges in electricity conservation in Singapore.

When NUS set up a green finance institute and the Monetary Authority of Singapore was generous enough to fund it, I knew the time was right for me to step up and lead it. 

Green finance has received criticism of late for mislabelling funds and greenwashing. What are your views on this? 

There is a grain of truth to the flak that green finance has been receiving, which is why SGFIN was set up [to address the criticism and build expertise in the field].

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The environmental, social and governance (ESG) world is still the wild, wild West. The layman probably does not know what ESG ratings are and whether corporations are disclosing their ESG information transparently.

Sumit Agarwal, managing director, Sustainable and Green Finance Institute

SGFIN aims to help companies embed sustainability as a key pillar in their decision-making processes. We equip companies with cross-disciplinary knowledge, training and toolkits to integrate sustainability dynamics into their business strategies and investment decisions to better measure and quantify their environmental and social impacts. 

SGFIN plans to reach out to Singapore-based companies before expanding our reach into other parts of Asia. Both listed and non-listed companies are welcome to partner with us.

Who are your career mentors? 

Nicholas Souleles, professor of finance at Wharton University, with whom I collaborated early on in my career. He shaped my thinking around problem-solving. David Laibson, professor of economics at Harvard University, provided me with a solid grounding in consumer behaviour theory.

Michael Greenstone, professor in economics and director of the Becker Friedman Institute and the interdisciplinary Energy Policy Institute at the University of Chicago is another person who inspires me. He makes the case for environmental economists to rely on quasi-experiments (that evaluate the causal impact of interventions but that do not use randomisation) to evaluate the cost-effectiveness of environmental actions.

What has been the proudest moment of your career?

Seeing my research translated into policy is the most satisfying part of my job. For example, as part of an international research team, I collaborated with national water agency, the Public Utilities Board (PUB) of Singapore, to study how Singaporean households’ shower water usage behaviour can be improved for water conservation.

We found out that when feedback was given about water usage, water consumption went down on average by about 10 per cent per shower, or two litres daily. The study served as a reference for the PUB in the launch of its Smart Shower Programme in 2018. That year, 300 units were fitted with smart shower devices and PUB said that it will progressively install a total of 10,000 smart shower devices in some Build-to-Order projects by end-2019. Installation finished in 2020 with no further plans, said PUB. 

What is the hardest thing about your job?

Having my papers rejected, which is part and parcel of the research process. I just move on and solve new research questions. 

Is there academic freedom in Singapore?

I know there’s the perception that academic freedom in Singapore is stiffled, but I beg to differ. Data access is very convenient in Singapore. Half of my research is on Singapore, and I have managed to get access to the data that I need to conduct my research.

I have written papers on Singapore that have raised eyebrows, and none of them have been retracted. For example, one of the more interesting papers I have worked on is on ethnic social networks in Singapore’s resale public housing market. The results implied that buyers value housing blocks with a higher concentration of the same ethnicity group of households. [The Housing Development Board of Singapore has an Ethnic Integration Policy to ensure that there is a balanced mix of the various ethnic communities in public housing estates.]

If you could start your career all over again, would you do anything differently?

I wouldn’t do anything differently. Life is dynamic, if I had chosen another path, who knows where I would be now. I am content with what I’ve achieved and have no regrets.

What’s the one thing you wish you knew before you started out in sustainability?

I wished I knew how holistic sustainability is. I used to think that sustainability necessitates a top-down approach, but now I also see sustainability as bottom-up. These days, I ponder over how individuals like myself can do our part for the planet. 

What advice would you give someone starting out in sustainability?

You need metrics to track your sustainability efforts. Also, sustainability is a vast field, think carefully about which space you would like to work in before taking the plunge.