USAID Green Invest Asia co-hosts 2nd annual Asia Financial Institutions’ Forum on impact investing in Asia
BANGKOK, January 23, 2020 – The United States Agency for International Development (USAID) Green Invest Asia co-organized the second annual Asia Financial Institutions’ Forum on impact investing in Bangkok on January 22, moderating sessions on blended finance and “green”, or sustainable, banking that examined how Asia’s financial markets can bolster Environmental, Social and Governance (ESG) commitments.
The event convened more than 600 investors and companies seeking what is widely known as sustainable finance, which rewards companies and initiatives with strong ESG performance with preferential financial products.
Such investments have grown at a rapid pace in Asia in recent years. In 2019 Asia had more stock exchanges with mandatory ESG reporting than any region in the world, and almost 200 service providers, investment managers and asset owners in the region who have signed the international Principles for Responsible Investment, according to the global financial service firm, UBS.
But this is still not enough, said Andrew Jan, who specializes in risk management and is head of balance sheet management at Thai bank, TMB, which offered the country’s first green bond ($60 million) in 2018.
“It’s a hailstorm out there and we are getting our asses kicked. [But] until there’s a foot of water in this room, until there’s a clear and present danger, investors will only put their money into [fighting] climate change when it makes sense… We don’t get enough pressure from [enough] shareholders,” said Jan.
The head of financial institutions and capital markets at Standard Chartered Bank, Madhur Mehta, noted that while investor behavior will not change “overnight” to tap into what the bank has calculated is a near $10 trillion-dollar investment opportunity, it is possible over the longer term. “To broaden the investor base [into Sustainable Development Goal-sectors], we need to educate and create awareness. For that, we need historical performance data [to prove] the opportunity.”
It is not only the investor base, but also companies and lenders who require support, said USAID Green Invest Asia’s Chief of Party (director) Christy Owen.
“Before the ink dries from commitment ceremonies, lenders and companies alike must tackle the challenges of sustainability, of insetting and offsetting carbon emissions, of training key staff, of finding suitable green investments, of integrating ESG commitments into company and banking practice, that is where even the most well-meaning of groups stumble into delays. And that is where we come in,” said Owen.
Operational since 2018, USAID Green Invest Asia is a technical facility that links investors with sustainable companies in Southeast Asia working in agriculture, forestry and other land uses, including rice, rubber, timber, coffee, cacao and peatland management, while helping those businesses scale and become investment-ready.
Some of the facility’s recent sustainable finance activities include publishing guidelines on sustainability-linked loans that target regional lenders and small and medium-sized enterprise (SME), supporting the Association of Banks in Cambodia integrate ESG into banking practices, and planning for the development and launch of what will become Cambodia’s first national green bank/financial institution.