London and Hong Kong-listed bank Standard Chartered has launched the first retail banking product in Asia that directly supports the United Nations’ Sustainable Development Goals (SDGs).
StanChart’s Sustainable Deposit (US$) enables the bank’s corporate and individual customers to use the money they deposit to support the SDGs, with initiatives the banks says will go towards projects to combat climate change, alleviate poverty and give people in developing countries better access to healthcare and education.
The product, which was developed with sustainability consultancy Sustainalytics, has been launched under StanChart’s new green product framework, introduced in May this year, and comes six months after it was made available to the bank’s European clients.
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StanChart has chosen Singapore as its Asia launch pad. The bank’s Singapore chief executive Patrick Lee said in a statement that, as a key hub for capital flows in Asia, the city-state could serve as a platform for its customers to put their money in places “where it is needed most”.
Through its research, the bank found Singapore has the highest number of high net worth investors in Asia who are interested in sustainable investing.
“While green deposits – dedicated to renewable energy – are increasing in popularity, this is the first time any bank has launched a deposit product linked to sustainability and the SDGs,” Lee said.
Customers in Singapore who deposit fresh funds of at least US$5,000 this month earn a promotional interest rate of 1.9 per cent for a tenor of three months.
Commenting on the significance of the launch, Tok Xinying, director of Singapore-based sustainability risk and strategy consultancy Asia Research and Engagement, told Eco-Business that the StanChart product’s launch in Asia so soon after the Europe launch showed that there is “fast growing interest” in Asian markets to use finance for good.
But she added that the launch is not without challenges.
While StanChart has a new green finance framework that outlines the causes that can benefit from the Sustainable Deposit, “customers who are interested in such a product probably want a clearer picture of the impact Standard Chartered is achieving as a whole”, she said.
StanChart can do this through clearer and more detailed disclosures of its loan and underwriting portfolios’ impact as a whole—by geography, by industry—not just of what is eligible under Sustainable Deposit, Tok explained.
For example, in the energy sector, impact disclosures should cover both renewable energy in the bank’s portfolio and also the impact of existing lending to coal-fired power, she said.
StanChart made headlines a year ago for being the first Asia-focused bank to rule out funding new coal development in the world’s biggest region for the extraction and burning of the fossil fuel for energy.
“The SDGs as a concept cover many fields,” Tok said. “The challenge is to be able to demonstrate the link between the finance and the impact. There is a growing field with both loans and bond products linked to SDGs in general, or specific SDGs in the Asian marketplace. More can definitely be done to give retail investors access to such products.”
She added that, in the European Union (EU), the definition for what constitutes a green investment product is to be standardised through the EU Taxonomy of Sustainable Activities to give retail customers comfort that the products they support will bring about impact. “We don’t yet have similar safeguards in Asian markets,” she said.