Asia’s banks see widening gap between ESG leaders and laggards

ASIA’S major banks are seeing a widening gap between environmental, social and governance (ESG) leaders and laggards, according to a World Wide Fund for Nature (WWF) report published on Thursday (Jan 12).

While leading banks in Singapore and Malaysia made headway on implementing environmental and social risk policies in 2022, over half of the 46 regional lenders surveyed in the report made “little to no progress”, said the WWF. It added that banks in Vietnam and the Philippines lagged the most.

Kristina Anguelova, head of sustainable finance in Asia at WWF Singapore, said the gap was “largely driven by regulation”. The central banks in Singapore and Malaysia have set out climate risk management guidelines, with climate stress tests planned or underway. Such green policies have prompted lenders to “restructure internally, to meet the regulators’ demands”, she said.

The report also found that 39 per cent of the banks surveyed had committed to net-zero financed emissions by 2050, up from 15 per cent in 2021. Most banks in Singapore, Japan and South Korea, including DBS and Mitsubishi UFJ Financial Group, have set net-zero targets. Few in Indonesia, Vietnam and the Philippines have done so.

Anguelova said that regulators needed to ensure there were no “loopholes”.

“We want to avoid capital going from a more regulated country to a country that has the least amount of barriers to continue with unsustainable activities.” BLOOMBERG