Green finance in Asia: Emerging themes and the need for innovation (The Business Times)
As global action towards achieving carbon neutrality gains momentum, Singapore has taken on the mantle to become the regional green finance hub. With the Monetary Authority of Singapore (MAS) leading the charge through the Green Finance Action Plan, many private players have also jumped on the sustainability bandwagon with recent announcements such as the launch of a Singapore-based global carbon exchange, Climate Impact X (CIX) by SGX, DBS Bank, Standard Chartered Bank and Temasek.
Despite these recent strides in the right direction, the Asean region still faces a significant green financing gap. A report by DBS and UN Environment on Green Finance Opportunities in Asean estimated that US$200 billion of green investment is needed annually from 2016 to 2030 in Asean to sustain progress.
An industry survey conducted by MAS and Oliver Wyman to collect problem statements for the Global Fintech Hackcelerator 2021 revealed key industry themes and challenges that we have distilled into three key observations.
In recent years there has been growing interest from institutional and retail investors to support and fund green finance initiatives. However, directing capital towards these initiatives remains a mammoth task. Besides the limited market for sustainability-linked financial instruments, investors and lenders also lack reliable, consistent and easily accessible data to make well-informed decisions on projects they wish to finance.
To encourage active participation in the green financing space, industry leaders are looking to empower institutional and retail investors with reliable and customisable tools to facilitate decision-making in allocating capital to green projects. Creating a viable marketplace that allows easy access to green investments, plus making sustainability-linked financial instruments attractive, are key to incentivising green capital flows.