Climate change and the advancement of sustainability regulations have recently prompted a significant paradigm shift in the ESG landscape. Asia’s economies are increasingly focussing on sustainability and lowering their dependency on fossil fuels. The continuous development of sustainability regulation in Asia have been key to bolstering the ongoing ESG momentum, here is a summary of key regulatory developments, industry updates and climate insights.
- SGX announced a phased approach to mandatory climate reporting against TCFD. (link)
- MAS has set out its regulatory expectations on the disclosure standards that retail funds in Singapore with an ESG investment objective must meet in 2022 (link)
- Investors must obtain more information on the fund’s investment process, as well as the risks and limitations associated with the fund’s ESG strategy.
- Investors will also receive periodic updates on whether the investment objective of an ESG fund has been met.
- The Hong Kong Securities and Futures Commission (SFC) has announced that from January 2022, ESG funds, and climate-focused funds products will have to disclose how they incorporate ESG factors, report and reference ESG criteria, showcase portfolio measurement approaches and release periodic assessments annually. (link)
- Synergy with SFDR: UCITS ESG funds in Hong Kong which meet disclosure and reporting requirements under Article 8 & 9 of SFDR will be deemed to have complied with disclosure requirements under the SFC
- The Malaysian cabinet has approved the establishment of a Carbon Trading Market. (link)
- The Bank of Thailand, the Securities and Exchange Commission, the Office of Insurance Commission, and the Stock Exchange of Thailand, have joined forces to steer and align the direction of Thailand’s sustainable finance policies. (link)
- Salesforce announced that it will introduce climate obligations in its supplier procurement contracts, and the company also released a new platform aiming to help companies to streamline how they track and measure supply chain carbon emissions. (link)
- Eco-Business has launched a networking and community engagement platform for individuals and companies in the sustainable finance space. (link)
Key Industry Movements
- MAS has appointed Dr Darian McBain as Chief Sustainability Officer. (link)
- HSBC has appointed Kelvin Tan, HSBC Thailand CEO as new the Asean Head of Sustainable Finance and Investments. Kelvin will be based in Singapore and reports to HSBC Singapore CEO, Wong Kee Joo. (link)
- Citigroup has appointed Ms Rapheal Mun to be based in Singapore as the Head of ESG & Sustainability for its Asia-Pacific banking, capital markets and advisory division. (link)
- We have less than 10 years to cut emissions by nearly half and less than 30 years to reach net zero, in order to keep global warming to within 1.5°C above pre-industrial levels.
- Global warming has already reached 1.1°C above pre-industrial levels, the warmest in 125,000 years.
- Green finance has not been able to reach the scale required.
- According to the International Energy Agency, global investment in energy projects need to more than double from its current level by 2030 in order to meet net-zero emission goals by 2050.
- According to a study by the Boston Consulting Group, the volume of climate financing will have to grow over the next three decades by roughly five to eight times the current amounts raised.
- Tropical forests are incredibly effective at storing carbon, providing at least a third of the mitigation action needed to prevent the worst climate change scenarios. Yet nature-based solutions receive only 3% of all climate funding.
- Natural climate solutions such as restoring degraded forests could create as many as 39 jobs per million dollars spent — that’s a job-creation rate more than six times higher than the oil and gas industry.
- Deloitte has reported that South-east Asia stands to suffer economic losses worth about $28 trillion in present value terms in the next 50 years, and reduction in GDP growth by an average of 7.5% each year in the same period if immediate action is not taken to keep global warming close to 1.5°C above pre-industrial levels.