Asean's green future needs a determined push to flourish

WE are entering a new era of green finance. An increasing focus on the environment has spurred global leaders and corporations to take action to address climate change and our effect on the environment as we push on with growth and development. This transition to a greener, more sustainable future will present new opportunities for business growth and much needed investment and interest in developing countries. This is where the green bond product has found its niche in the market.

The Paris Climate Agreement galvanised commitments to green initiatives and technology across the globe. The resulting need for finance saw unprecedented growth in green bond issuance and interest in the past year. The Climate Bonds Initiative (CBI) reported more than 90 new issuers in 2016 and a doubling of green bond issuance from just over US$40 billion in 2015 to cross the US$80 billion mark. The market continues to mature and diversify with bonds from an increasing number of countries, bond types and issuer types. Demand also far outstrips supply among investors both with and without a green mandate.

But the growth trajectory of the green market does not stop there. Many countries worldwide have reaffirmed their commitment to the Paris Climate Agreement. Specifically, we saw Apple reaffirming its commitment to the environment by issuing a mammoth US$1 billion green bond. Meeting these commitments is estimated to require nations to spend nearly US$1 trillion a year till 2035. We can expect more issuances from sovereign and sub-sovereign issuers as governments seek green investments to finance infrastructure development on a large scale. According to the CBI, green bond issuance is projected to nearly double to US$150 billion in 2017, and the OECD expects this to potentially reach between US$620 billion to US$720 billion a year in the near future.