Following the publication of a report by the World Wide Fund for Nature (WWF) last year that laid bare the unsustainable financing practices of Asean banks, WWF will be launching the Asia Sustainable Finance Initiative (ASFI) in the second half of 2018.
A new platform operating out of Singapore, ASFI’s mission is to direct capital in Asia towards investments and economic activities that have positive economic, social and environmental impacts.
Supported by the Monetary Authority of Singapore (MAS), ASFI will bring together the different players in the finance industry such as regulators, academics, banks and businesses to develop and facilitate best practices in sustainable finance. They will be able to make use of a virtual knowledge hub featuring research, tools, and best practices on sustainable finance once it is launched in the second half of 2018.
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ASFI will also support the development of regional standards and guidelines for assessing sustainable finance and assist financial institutions in measuring Environmental, Social and Governence (ESG) outcomes, thereby improving their capacity to better engage portfolio companies through their lending policies.
The upcoming launch of ASFI was announced in a keynote address by Masagos Zulkifli, Singapore’s Minister for the Environment and Water Resources, at the ASIFMA 2018 Green Finance Conference on 5 June. He said the launch of ASFI in Singapore would strengthen the city-state’s position as a “sustainable financing hub for the region.”
“By creating the conditions to guide financial flows towards sustainable businesses, ASFI aims to elevate the resilience and therefore competitiveness of Singapore’s economy. ASFI will cement the country’s status as a leading and innovative sustainable finance centre that plays a crucial role in developing the region by creating positive economic, environment and social impacts,” Jeanne Stampe, WWF’s head of Asia sustainable finance, said.
Asia Sustainable Finance Initiative will cement the country’s status as a leading and innovative sustainable finance centre that plays a crucial role in developing the region by creating positive economic, environment and social impacts.
Jeanne Stampe, head of Asia sustainable finance, World Wide Fund for Nature
Regional banks and Singapore’s asset managers both play a critical role in influencing business behaviours across all sectors through their lending practices. Asset managers in Singapore source 78 per cent of their funds from overseas and 66 per cent of these funds are invested in Asia Pacific, according to the 2016 Singapore Asset Management Survey conducted by MAS.
Currently, some measures promoting sustainable financing in Singapore include the Guidelines on Responsible Financing by the Association of Banks in Singapore in 2015, the mandating of sustainability reporting for listed companies by the Singapore Exchange, which started at the end of 2017, and the Green Bonds Grant scheme by MAS, introduced in 2018.
Within Asia, ESG criteria are now investment requirements for pension funds in Japan, Taiwan, Malaysia and Korea, while shareholders’ guidelines have also evolved to place greater pressure on investors to responsibly engage the corporate sector.