New Asian Sustainable Finance Initiative aims to drive change with local institutional investors

Asian companies and investing institutions are being given further encouragement to integrate responsible investment principles with the launch today (Monday 21 Jan) of the Asia Sustainable Finance Initiative (ASFI), which notably includes major backing from the Worldwide Fund for Nature (WWF).
ASFI says it can support financial institutions in delivering their commitments under global initiatives such as the UN PRI, Principles for Responsible Banking (PRB), Principles for Sustainable Insurance (PSI), Science Based Targets (SBT) and the Taskforce for Climate Related Financial Disclosures (TCFD). Its focus will be on Singapore as a hub for sustainable finance in Asia. As well as WWF, the partners within ASFI are the Asia Investor Group on Climate Change, CDP, The Singapore-based Centre for Governance Institutions and Organisations, National University of Singapore, Global Canopy, Oxford Sustainable Finance Programme, UNEP Finance Initiative, World Resources Institute and 2° Investing Initiative. ASFI will focus on areas where it feels the finance sector needs to develop a deeper understanding. These include disseminating updates about the most meaningful and credible standards and certifications that institutions can use to drive transparency and improvement in corporate sustainability. Green finance solutions is another key area where ASFI says it will support the development of solutions that have clear positive financial, environmental, and social outcomes. The Association’s spokesperson, Jeanne Stampe, head of Asia sustainable finance at WWF in Singapore, spoke to RI. In all, the WWF has 33 sustainable finance professionals in Asia out of its total staff of 80. With WWF as the secretariat, the ASFI platform brings together experts from the finance industry, academia and science-based organisations. Stampe explained that WWF has identified the finance sector as a key driver of change. The practice’s work draws from conservation experience on the ground across WWF’s global practices and transformative work with companies on key issues such as climate, food, energy, and water. “Asia needs over $5 trillion dollars to finance the transition to sustainability,” she said. “The financial sector is seen as crucial in creating resilient and sustainable economic growth through its ability to influence companies to adopt best practices and to direct financial flows towards sustainable development outcomes.”The idea is not to do things in a bubble, she added, which is why the involvement of the financial institutions is important to meet the needs of the market.
Stampe emphasised that knowledge transfer is the key activity of ASFI. “It’s not a brokerage function and it’s not a platform like other impacting investing forums where projects needing money are paraded.” Asset owners are welcome to participate, Stampe said: “Whether they are sovereign wealth funds, pension funds or insurance companies, ASFI and its partners can work with asset owners directly, to help them understand the type of climate and other material ESG risks they are exposed to. And it can help them understand what to look out for in the fund managers they hire to manage their money.”
Although no Singapore asset owners are actively involved at this stage, Stampe added: “GIC, Temasek and any sovereign wealth fund, private equity fund or private investor is welcome to be a part of this.” Institutional investors have a key role to play in this initiative because, as Stampe says, “natural capital is not well looked after in Asia, which means that businesses, nations, societies are at risk. So the finance sector has the power to drive change in these portfolio companies, which can also drive better value and ensure that their portfolios become more resilient.” Sustainable finance is a critical lever to address the increasing vulnerability of the region to climate change, the degradation of land and ocean ecosystems, labour and human rights, and water risk. At the same time, the shift to sustainable economies represents around $5 trillion of investment opportunities between now and 2030 in Asia alone, according to the Business and Sustainable Development Commission. Singapore itself has already introduced banking sector guidelines on responsible financing. The SGX has developed sustainability report listing requirements for companies and the Monetary Authority of Singapore (MAS) has announced a green bonds scheme. Stampe said: “There’s good momentum in Asia now. We have seen stewardship codes emerging in Korea and Taiwan. In Japan, the Government Pension Investment Fund has made a big step forward and made it clear how important ESG integration is. It has really helped to shift the market. We also see that the banking sector has come up with green lending guidelines; so you see that in Malaysia. Indonesia has a road map and Vietnam has new codes for directors in banking.”