Bankers open doors to green financing

October 16, 2018

PHOTO: The Bankers Association of the Philippines (BAP), ASEAN Bankers Association (ABA) and the Association of Banks in Singapore (ABS), together with the World Wildlife Fund (WWF) gather financial institutions and industry experts to discuss green financing and its feasibility in Southeast Asia.

Bankers in Southeast Asia are looking into green financing to combat the adverse effects of climate change in the region.

The Bankers Association of the Philippines (BAP), ASEAN Bankers Association (ABA) and the Association of Banks in Singapore (ABS), together with the World Wildlife Fund (WWF) convened recently to discuss the role of financial institutions in pushing for green financing.

Over the last two decades, the Philippines is among the countries that have been mostly affected by climate change, but investments in sustainable development in the country still fall behind its regional peers.

Green financing is a form of investment specifically dedicated to sustainable projects that could help mitigate the effects of climate change. Overall, Asia still lacks readiness and resiliency while only a handful of countries have a firm environmental, social and governance (ESG) standards.

“The evident gap at present in terms of ESG standards in the Philippines leaves us financial institutions, together with our regulators and other experts to develop and become more resilient and climate change-conscious,” BAP president Nestor Tan said.

Green financing in Southeast Asia is estimated to be value around USD 3 trillion and spread around infrastructure, renewable energy, energy efficiency and food, agricultural and land use projects. In the Philippines alone, green investment opportunity in infrastructure is estimated to be around USD 28 billion.

BAP said that the meeting of industry leaders opens an opportunity for banks to assess sustainable financing and is a step in the right direction towards a green economy.

“Sustainable finance is slowly gathering speed. Regulators are assessing parameters in ESG; investors are now more curious about green funds; and now more banks acknowledge its feasibility and efficiency. Green lending and investment is slowly being tapped by Philippine banks,” Tan said.

There is now a rising trend among investors around the world expecting companies to invest more on sustainable projects, encouraging companies and financial institutions to review existing systems in place and report climate-related risks.

Like any other new investments, green financing has its own inherent risks but BAP is optimistic that with steady awareness campaigns, appropriate capacity building and regulatory support, all stakeholders will soon realize its opportunities and long-term benefits.

“We are on a journey to becoming more sustainable economies in the region. Dialogues are ongoing across banking industries to hopefully capture the full potential of sustainable financial markets in the region,” Tan ended.

BAP said that there are more dialogues happening soon to help bring awareness to the feasibility of sustainable financing. Now on its fifth leg, the meeting is part of a series of events that ABA and ABS, as chairman of the ABA’s Cooperation in Finance, Investment, Trade and Technology (COFITT) Committee, organize all over Southeast Asia.