Roundtable panellists:

• Sylvia Chen, head of ESG for South Asia, Amundi

• Helge Muenkel, chief sustainability officer, DBS Bank

• Mariam Ashroff, head of sustainability management for Asia, LGT Private Banking

• Tan Siew Lee, head of wealth management, OCBC Bank

• Kim Rosenkilde, group chief investment officer, Singlife

• Melissa Moi, head of sustainable business, UOB

Moderator: Janice Lim, The Business Times

BT: There has been much focus on transition finance in 2022. Can we expect to see new and innovative products and services targeting this area of financing in 2023?

Ashroff: Transition finance is critical for closing the climate funding gap and achieving the necessary transition to a low-carbon economy. Such financing is crucial for supercharging the growth of proven environmental and technological solutions that clearly impact greenhouse gas (GHG) avoidance and mitigation. As more financial institutions recognise the need for such investments, we expect that new and innovative products will emerge in this space.

On the investor demand side, we see a growing client interest in Asia for impact investments focused on climate change. In 2022, we introduced a climate-focused impact investment solution targeting growth-stage businesses that contribute to measurable GHG emission reductions across our five climate investment themes. These themes correspond with the technology mix required to achieve net zero by 2050, including energy transition, decarbonising industries, sustainable food and agriculture, and sustainable transportation. Such investment solutions are offered to LGT clients through LightRock, a global private equity platform with US$3 billion in assets under management.

Internally, we are exploring the possibility of introducing transition-focused products that seek to invest in companies that may not currently score highly on sustainability metrics but are actively working towards decarbonisation while prioritising good governance practices. Through our research processes, we aim to identify the sustainability leaders of tomorrow who are transforming their business models by investing in sustainable research and development, securing new patents, and pursuing sustainability-focused mergers and acquisitions.

A NEWSLETTER FOR YOU

Friday, 12.30 pm

ESG Insights

An exclusive weekly report on the latest environmental, social and governance issues.

Sign Up

To broaden our transition financing offering, we are also looking at fund managers with a proven track record in sustainable investing who are now introducing transition financing products. When evaluating such products, it is vital to understand the transition markers and decarbonisation metrics considered in the investment process. The investment process should prioritise real-world decarbonisation over portfolio decarbonisation to drive meaningful change.

Chen: Transition finance is predicted to grow in popularity in the field of responsible investment in specific geographies and sectors, as it is needed for a whole-of-economy decarbonisation to achieve the objectives of the Paris Agreement.

Having said this, for transition finance to be successful in achieving the transformation of the real economy and gain credibility, certain challenges need to be overcome. There is still little consensus on how to support the transition to an inclusive low-carbon economy, as there are no set of technical criteria or qualifying sectors or technologies that are commonly used. Transition finance is still a nascent approach and needs to gain credibility by setting tangible KPIs (key performance indicators) and by taking a dynamic view. Better transparency, consistency, and real success stories need to be developed. 

We anticipate several factors that can support a credible transition finance trend in Asia. As the real change need to happen at the company level, we do not believe that specific financial instruments will be needed, and that existing ones should suffice. Issuers can typically finance decarbonisation projects by issuing sustainability-linked bonds, the proceeds of which are used to fund projects with environmental and/or social benefits. Another driver of success and credibility will be increased data transparency and consistency, and dissemination of real success stories. Lastly, active ownership and shareholders’ continued engagement on climate strategies will greatly influence companies. 

A good step in the direction of an ambitious transition finance is the establishment of Just Energy Transition Partnerships such as the one launched with Indonesia at COP27, which refers to the United Nations (UN) climate change conference last year. If successful, such a visible initiative that leverages public money will have two main benefits: creating the environment of a decarbonised development in Indonesia, including the development of an adequate economic ecosystem, and establishing an example that will be replicated by other countries.

Moi: Transition finance is still at a nascent stage in the financial market. Net-zero plans for high GHG-emitting sectors remain to be defined. At UOB, we actively engage with our stakeholders, including regulators, in Asean (Association of South-east Asian Nations) to discuss the importance of coming up with transition pathways for these sectors, so that everyone is clear of the road ahead to reach everyone’s end goal.

An equally important focus is establishing transition pathways backed by clear definitions and guidelines on acceptable activities, as well as timelines for decarbonisation. Quality transition pathways that are material and ambitious can unlock transition finance in support of businesses that are truly adopting cleaner technologies and becoming greener in time.

Singapore has developed a taxonomy that guides the identification and classification of activities that can be considered green or transitioning towards green. The taxonomy will support the provision of transition finance to the broader economy, and facilitate the move towards a cleaner and greener future. In this regard, we can expect to see more solutions related to transition finance as it gains traction. 

Tan: We have supported clean and renewable energy projects and green buildings, and have a target to grow our sustainable financing portfolio to S$50 billion by 2025. Already, more than S$44 billion has been committed. We are the only bank in Singapore to introduce a net-zero-aligned loan for corporates to drive transition to a low-carbon economy – our OCBC 1.5°C loan is a testament to our ongoing commitment in supporting the world’s low-carbon transition.

We find innovative ways to drive the sustainability movement, such as our ongoing research initiative with the National University of Singapore in 2022 to develop a deeper understanding of what encourages Singaporeans to adopt electric vehicles (EVs). We will eventually parlay this knowledge into developing more relevant products and services to our customers and help to increase EV adoption in Singapore.

Demand for sustainable products and services will only increase as awareness levels continue to rise. We launched environmental, social and governance (ESG) ratings for our OCBC RoboInvest (robo-investment) portfolios, and we also look to launch more ESG investment products.

As we aim towards regional leadership in sustainable and responsible banking for a low-carbon economy, we have committed to moving towards net-zero emissions for all our operations and business activities. We will increase financing support for sustainable development and develop sustainability-themed products that help in the transition to a low-carbon economy and we will develop an ecosystem of bank-wide solutions and partnerships to protect biodiversity, nature capital, and address environmental challenges.

Muenkel: The complexity of transition necessitates a toolbox of innovative products and services that can assess the credibility of transition plans, as well as establish a clear, measurable link between the quality of an asset or project, and whether its associated activities are green, brown or transitional. These must be underpinned by transparent reporting; data collection and measurement are also required to accurately determine impact.

Financing tools may include debt instruments like sustainability-linked or transition loans, as well as equity instruments, to help companies implement low-carbon technologies, or redesign operations and processes that are more sustainable.

In 2022, DBS achieved a combined total of S$480 million in transition financing through use-of-proceeds transition loans and transition-focused sustainability-linked loans.

For example, we provided a 1,750-million-rupee (S$28.3 million) transition loan facility for Shree Renuka Sugars, a subsidiary of Wilmar International, and one of India’s largest sugar and green energy producers. The loan was deployed to expand the company’s sustainable bioethanol business in support of the nation’s push to double its ethanol distillation capacity and blend 20 per cent of ethanol in petrol by 2025. This was the first transition loan provided by a foreign bank to India’s biofuel manufacturing industry.

BT: Regulators are increasing their scrutiny over ESG funds and its labels as greenwashing allegations mount. How would this impact investors and financial institutions in this region, in particular on matters relating to transparency and disclosures? How would they manage differences in ESG regulations in different jurisdictions? Would there be convergence or greater fragmentation?

Tan: The ESG investment landscape is in a delicate spot. A balanced approach is required between stimulating market mechanisms for increased ESG offerings, and ensuring investors’ fund flows are channelled to the right avenues amid varied industry classification frameworks.

With the European Union’s (EU) Level 2 Sustainable Finance Disclosure Regulation (SFDR) regulatory technical standards and the Monetary Authority of Singapore’s ESG fund guidelines in effect this year, we expect to see more industry-wide capital movements and increased proactive fund “re-labelling” among financial institutions. While regulatory tightening may incite an outflow of funds, it sets a strong foundation for a credible disclosure norm which will spur future capital mobilisation at scale, devoid of greenwashing risks. This could subsequently lead to a potential policy convergence across regions, building up investor confidence, promoting greater transparency and driving positive ESG investment outcomes, while unlocking risk-adjusted returns for investors.

Muenkel: Broadly speaking, greenwashing can be categorised into two types – with or without intent. I believe the former is a minority. Where allegations commonly occur is in the second instance, where an activity or initiative is well-intended but may fall short of expectations due to a lack of a global agreement on what is green, transitional or sustainable. A lack of unified standards or methodologies for measuring the impact of such activities further adds to the challenge.

In addition, inconsistencies in green definitions may confuse businesses and investors who conduct cross-border activities, which adds to financial risk.

The exponential growth of sustainable financing has motivated the establishment of regional and national taxonomies to define green or amber (transitional) activities, as well as provide detailed guidance on what comprises a credible investment to achieve desired sustainability objectives and safeguard market integrity. Taxonomies also serve to enable better alignment and standardisation of eligible assets, activities and metrics for sustainability themed financial products such as bonds, funds, or exchange-traded funds (ETFs), which can further help to reduce fragmentation across markets.

One good example is the Asean taxonomy. This regional framework serves to create a common language and understanding of what is “green” or “transitional”, with the aim of unlocking capital to finance the path to net-zero across various industries. It also serves as a foundation upon which member states can develop and implement their own national taxonomies for green or transition activities – by providing clear guidelines for financing outcomes that can be linked to distinct categorisation of activities for greater transparency and accountability.

The challenge lies in striking a balance between harmonisation and providing enough room for differentiated activities to enable the transition in different jurisdictions, such as the phase-out of coal.

Ashroff: The EU’s sustainable finance initiative is helping to drive harmonisation in the financial industry on sustainability regulations relating to transparency and disclosures. However, these initiatives are still evolving and clarifications are expected from regulatory bodies on various sustainable investing-related definitions. 

Although integrating ESG in the investment process has become mainstream in the financial sector, the ESG criteria can be determined, evaluated and weighted differently depending on the investment manager’s ESG methodology and the strategy of the investment product. The corresponding information is not always accessible to investors which makes it difficult for the investor to understand the sustainability objective of the investments.

To avoid greenwashing, a financial institution must prioritise clear communication with its investors regarding how sustainability risks and principal adverse impacts are being systematically integrated into the investment process. For sustainable investment products, it is equally crucial for financial institutions to convey to their clients how environmental and social characteristics are measured and prioritised in the investment selection process.

Chen: Regulations in Asia greatly differ across countries and regions, yet there is an overall trend from voluntary compliance to mandatory disclosure. For instance, some jurisdictions such as Singapore, Hong Kong and Malaysia have released regulations aligned with recommendations by the Taskforce on Climate-related Financial Disclosures (TCFD), and Taiwan and Japan have issued sustainability reporting and stewardship codes. China has also progressed by setting in place guidelines on environmental information disclosure for financial institutions, the EU-China Common Ground Taxonomy, and there are ongoing consultations in the Securities and Exchange Board of India regarding ESG regulation. 

Even though responsible investments today encompass different approaches depending on factors such as local regulation, investor philosophy and preferences, or impacts objectives, the ultimate aim is to provide and develop bespoke solutions for clients. While we recognise the benefits of varied approaches locally, such variety also hinders the extraterritoriality of sustainable investing solutions. We believe that common standards are needed to preserve the credibility of responsible finance and facilitate its adoption by clients. Examples that we could mention are methodologies, data and disclosure standards.

As the market is growing and organising, with regulations being developed in several geographies, not only in Asia, but also in Europe, for example, we are convinced that the interoperability of the standards, when possible, will benefit not only all the market players but also their clients and stakeholders. 

Moi: Regulators in the EU and Singapore are among the first globally to introduce ESG-related product labelling requirements. These are positive efforts in the standardisation of fund labelling in the long run to mitigate greenwashing risks. 

However, there are several challenges arising from different requirements. For instance, the lack of alignment among different jurisdictions on how funds should be classified and on what needs to be reported can lead to regulatory enforcement, litigation and reputational risks for fund asset managers and distributors. Ideally, classification, disclosure and reporting should be governed by a globally-coordinated standard.

Limited availability of data for private assets is also a challenge to enable accurate classification, disclosure and reporting. While proxy data can help in the early days of attempting to comply with product labelling regulations, there needs to be a long-term solution to replace proxy data with accessible, consistent and reliable data. 

Beyond mitigating greenwashing risks, investors are also seeking to measure and report on their impact on sustainable development. The inter-relatedness of their investments, various sustainability classification frameworks and the data they require is not yet fully transparent or distinct. We expect a continued focus across the ecosystem – from regulators to investors – on connecting the dots from taxonomies and impact frameworks to quantifying contributions to the UN Sustainable Development Goals. This will help give rise to quality definitions and data, and verifiable impact. 

Rosenkilde: This is an important issue and one we are spending time on to ensure we are not exposed to risks. Having said that, there are concerns that it may hinder innovation as well as the courage and resolve that the industry needs to show when it comes to transition finance and ESG in general.

While there’s an urgent need for a common denominator for classification, it’s important that the ambitions remain as they are today and not converge to the lowest common denominator.

BT: ESG investing has generally been focused on reducing greenhouse gas emissions. We are seeing greater intersection between the transition to a low-carbon economy to social impact, human rights and concerns about biodiversity loss. How should financial institutions change their approach to sustainability, as they attempt to integrate these emerging investment themes into their overall strategy? Would there be a shift to impact investing, for example?

Tan: We see an accelerated trend of investors starting to recognise the dual role investment plays – to grow their wealth, and using money as a force for good. Rather than a singular shift towards impact investing, we foresee both ESG principles and impact investing coexisting in the industry as part of a sustainability-driven investment ecosystem to help consumers build more resilient portfolios.

Efforts to tame GHG emissions are crucial for a collective transition to the 1.5 degree pathways, but there is a larger need for institutions to adopt a holistic approach in developing sustainability strategies that encompasses not only environmental concerns, but also social and governance considerations.

We have expanded our ESG and thematic impact investment offerings to consumers, enabling them to unlock financial opportunities while investing in companies that make a positive impact in ESG areas, such as renewable energy and sustainable farming. Our impact investing portfolio on our OCBC RoboInvest platform provides investors with a well-diversified exposure to companies that are industry leaders with ESG characteristics. There are also ESG-screened ETFs that allow quick access to stocks of companies that are ESG-rated.

Between June 2021 and June 2022, our impact investing portfolio size grew 2.5 times, while the number of customers who invested in the impact investing portfolio grew 75 per cent from 2021, with 70 per cent of the investors aged below 40. That said, interest in impact investing is not only limited to the young. Our customers aged above 50 who invested in the impact investing portfolio grew by more than 2 times from 2021 to 2022, with amounts invested by these customers growing by 2.5 times.

As a financial institution, we must also adapt and swiftly evolve to prepare for a substantial capital allocation from UN PRI (Principles for Responsible Investment) signatories which represent US$121 trillion in assets under management. I expect this will fundamentally reshape the wealth management landscape in the coming years.

Ashroff: As the urgency to mitigate and adapt to climate change increases, we will begin to see greater intersections between the transition to a low-carbon economy and social impact. This is why a just and orderly transition is especially important to many economies in Asia. A just transition is to ensure that the shift to a low-carbon economy is fair, inclusive and equitable. The transition will have significant impact on workers, communities and regions in Asia that have relied on industries that are major contributors to GHG emissions. Measures such as retraining programmes and financial support are key to ensuring that vulnerable and marginalised communities are not adversely impacted by the transition.

Impact investments, which are often private equity investments, are key in supporting innovation and nascent developments in climate action. However, to make a broader impact and more effective transition, the public markets, which are 20-fold the size of the private equity markets, are critical. Financial institutions should take a closer look at the steps a company is taking towards transitioning its business model to be aligned with achieving net-zero by 2050 and define social metrics to assess the company’s actions in facilitating a just transition.

Biodiversity loss is another key topic we are focused on at LGT Private Banking. Human livelihoods, well-being and key economic activities are all dependent on healthy biodiversity. From the provision of materials and commodities for shelter and building, to the regulation of climates to grow food and crops, the natural world provides access to vital services. Over half of the world’s total GDP is moderately or highly dependent on nature and its benefits or services and, as a result, is exposed to risks from nature loss.

The financial community has a critical role to play in helping companies have a more positive impact on nature. As a conscious actor in the financial sector, LGT recognises the threats posed by the loss of precious natural capital. We support a number of philanthropic activities that promote biodiversity. However, we also recognise that these activities must go beyond philanthropy and become embedded in our day-to-day business and across the different stages of our products, services and operations. The key challenge on this topic is obtaining data. Measuring biodiversity loss is complex and the standards are yet to be developed.

Rosenkilde: A just transition is a good starting point but there’s no one-size-fits-all approach. It’s not a straightforward endeavour.

For example, at times, we will need to invest in a way where we could have a brown asset that is necessary for establishing a green asset. A case in point is the transportation of ammonia for hydrogen production, which can only be done by a brown asset like a ship. What we can do is to make sure those ships are more energy efficient than the current fleet and therefore create less of an impact.

The focus on impact investing will be there, but not necessarily as we have categorised or classified it in the past. Similarly for the three E, S and G dimensions which are interconnected and overlap in many ways. Each is as important as the other. For example, in our part of the world, we are heavily dependent on energy sources for us to have a certain standard of living. We need to ensure we get from where we are today to the point where we want to go without making compromises.

It’s a very challenging thing to do, but for a just transition we need to consider all dimensions.

Chen: Asia stands out as one of the regions most exposed to physical climate risk. The latest COP27’s agreement to a landmark loss and damage fund to support vulnerable developing nations which have been severely affected by climate change is a key step to enable these nations to mitigate or reduce the impacts of physical risk of the climate change. More climate finance is needed for adaptation measures to handle immediate and near-term risks and building implementation, measures and efforts to mitigate the most serious effects of more frequent and serious climate crises.

Critical infrastructures need to be adapted, retrofitted, or even relocated to be resilient in situations of extreme weather events with higher intensity and frequency. 

Long-term ESG themes will continue to benefit from the aftermath of the Covid-19 crisis and the Ukraine war. Investors should get exposure to energy transition and food security, as well as re-shoring trends provoked by geopolitics. Besides working on energy transition in boosting renewable energy developments, setting more ambitious clean energy mix, improving grid operations, and pushing for more storage solutions and technologies, many nations have placed greater emphasis on energy security and reliability, and further embrace climate tech investments and solutions such as CCUS (carbon capture, utilisation and storage), CDR (carbon dioxide removal) and hydrogen.

Particularly in Asia, other than clean energy solutions, another area of focus for energy transition would be on phasing out dirty assets such as coal. Nations with heavy reliance on coal have been working to reduce such reliance.

Another ESG focus is about food security. Food security is becoming a critical ESG factor in the rise of inflation, disruption of supply chain, and climate change risks. To improve long-term food security, comprehensive measures and investments are needed to strengthen food systems against the impact of climate change and biodiversity loss. The food ecosystem touches various themes, ranging from sustainable agricultural production, food distribution, irrigation and water resources, to access to rural finance and support of local, smaller-scale farmers. For nations that depend heavily on imports of food such as Singapore, where more than 90 per cent of food is imported, food security is a major risk.

Social themes will be back in focus, as the deteriorating labour market and inflation draw more attention to social factors. Just transition to minimise the negative impacts of the transition to a low-carbon economy is particularly important in Asia, as this means social unrest from the job transformation, replacement or loss if not planned properly. The recent pandemic has proven challenging for certain places to have access to essential services such as healthcare, education, clean water and food, so equitable access to such needs still require much attention. 

Another social issue on the rise is in the supply chain, following the introduction of the United States Inflation Reduction Act and EU Supply Chain Directive. Companies would be required to trace and manage social and environmental impacts such as human rights, safety, welfare and community development along the entire value chain. Supply chain sustainability and due diligence strategy need to be reinforced to identify and assess ongoing operational risks, and be in line with the overall ESG strategy of the company. 

On the governance theme, as more companies have committed to ESG targets, linking ESG performance to pay of top executives is encouraged. This should help to establish oversight and responsibility and show credibility to companies’ ESG targets. However, South-east Asia still largely lacks this practice. According to a recent report by PwC Singapore and the Centre for Governance and Sustainability (CGS) at the National University of Singapore, only 16 per cent of Asean-listed companies explicitly disclosed that ESG factors are incorporated into executive remuneration.

Muenkel: The pandemic underscored the fragility and interconnectedness of environmental and social issues.

We are starting to see a shift to more purpose-driven, inclusive model of growth, fuelled by investments that consider financial returns as well as social and environmental impact. Against this backdrop, our role is to develop innovative products and services, as well as curate investment opportunities that closely align with investor demand.

For example, DBS and Heritas Capital launched the Asia Impact First Fund, which aims to provide catalytic growth capital to support innovative and high-growth social enterprises in the region. The fund was established as a means for private banking clients to contribute impact capital and take an active part in shaping the direction of their giving. In March 2023, the fund announced its successful first close having raised over US$20 million – led by anchor investor DBS, which committed US$10 million – together with impact-focused family offices, foundations, corporates and high-net-worth individuals, among others.

Moi: Sustainable development is about meeting the needs of the present without compromising the ability of future generations to meet their own needs. This goes beyond climate action and environmental stewardship, and includes positive social impact so that economies and enterprises can stay resilient and relevant for the long term.

At UOB, our sustainability strategy is underpinned by our corporate purpose and mirrors our business approach of balancing growth with responsibility. In this way, we focus on doing what is right for our stakeholders, taking into account the influence and impact our decisions and actions may have on them and the environment over the short, medium and long term. It also ensures that we remain economically relevant through managing ESG risks and opportunities practically and in line with market realities.

Our sustainability approach extends to our investment management subsidiaries, which are signatories to the UN PRI. UOB Asset Management is guided by its sustainable investment framework and considers climate change, water risk, biodiversity loss, labour and human rights among the ESG considerations in its fundamental analysis and investment approach across asset classes. 

Our private equity arm, UOB Venture Management, focuses further on positive impact creation through its Asean China Investment Funds (ACIF) and the Asia Impact Investment Funds (AIIF). In particular, the AIIF support companies that generate positive social outcomes and financial returns by improving the well-being and livelihoods of the “base of pyramid” communities (people living on US$3,000 or less a year). Some of the key impact sectors that the AIIF focus on include access to finance, education, agriculture and healthcare.

BT: How would the current banking crisis in the United States and Europe affect sustainable investing in Asia-Pacific? Do financial institutions in this region foresee some capital intended for sustainable investing being held back, at least in the near term?  

Rosenkilde: There is evidence of credit tightening this year compared to the past couple of years, and this is a natural transition from a lower interest rate policy. Even with an inflation-fighting monetary policy, we’re unlikely to see excessive capital held back when it comes to sustainable investing as it gives returns that can be more lucrative, and more importantly are also more predictable.

For sustainable infrastructure investments – often aligned to a sovereign wealth fund established by a government that wants to see your green transition away from current supplies of energy – you can see it in the build-out of other critical infrastructure such as ports and digital infrastructure assets, where it clearly will have a long-term impact both on the society and community.

Tan: While growing concerns over the health of banks in the US and Europe – and their knock-on effects within the global economy – did spark a rush towards safe havens such as gold in the near term, we do not foresee the turmoil in the banking industry to be a dampener on the growth of sustainable investing. On the contrary, this has increased the need for a deeper assessment of ESG considerations such as risk management, corporate transparency and stakeholder engagement, which are critical in revealing the long-term resilience and stability of companies. Moreover, the demand for sustainable investing in Asia-Pacific is accelerated by demographic shifts, growing policy initiatives and an increased awareness of sustainability risks posing investment risk among industry participants in the region. Hence, this reinforces our belief that any investment slowdown is temporary and a knee-jerk reaction to current events, which will not alter the structural shift in capital towards sustainable investments.

Ashroff: We don’t see the current banking system woes in the US and Europe having a direct impact on sustainable investing in Asia-Pacific, per se.  If falling commercial real estate values in the US result in further stress for smaller, regional US banks, then we may see negative investor sentiment impact risk assets in general.  In such an environment, we continue to advocate for well-run, ESG-focused quality companies as their longer-term outlook would be more resilient.  This underscores our overall investment approach, which is underpinned by the ESG ethos of our proprietary sustainability framework, coupled with solid risk management and global diversification. 

Moi: The demand for financing to support sustainable development will continue to grow, with more attention being paid to issues including climate change, biodiversity loss, poverty and lack of access to essential services such as energy and education. 

From responsible and sustainable financing to sustainable and impact investing, there is a need for financial institutions to help channel funding to projects and initiatives that create positive impact in alignment with the UN Sustainable Development Goals. 

In fact, many businesses across Asia listed greater financial support, including more sustainable financing solutions, as one of the items on their wish list in adopting sustainability, according to our recent UOB Business Outlook Study 2023.

About 92 per cent of consumers across Asean also expressed that financial institutions should provide more sustainable investment solutions, according to another study UOB did on regional consumer sentiment.

UOB’s findings validate that across the value chain, sustainability and the need for funding to support sustainable development will remain high on everyone’s radar.

Muenkel: The rapid and widespread acceleration of efforts to advance net-zero means that the train for sustainable investing has, well and truly, left the station.

As at November 2022, around 140 countries announced or were considering net-zero targets, covering over 90 per cent of GHG emissions. Globally, over 4,800 companies have set science-based decarbonisation targets or made net-zero commitments. Projects can tap into a sizeable war chest, thanks to over US$130 trillion of assets under management committed through the Glasgow Financial Alliance for Net Zero (Gfanz). Though short-term challenges – such as the Russia-Ukraine conflict – may always arise, we believe these efforts will further cement the momentum behind the global transition.

Public and private commitments, together with available capital for deployment, have not only raised significant awareness but also set in motion decarbonisation activities across communities-at-large.

In Asia, home to three of the world’s largest populations (China, India, and Indonesia), the drive for inclusive, low-carbon economic growth is keeping pace, driven by strong national commitments towards sustainable development. These public sector initiatives will, in turn, create opportunities for private capital flows.

In addition, greater regulatory certainty through the introduction of regional and/or national policy frameworks and greater harmonisation of taxonomies will help to provide clear guidance and confidence to investors.