PBEC, ESBN and KPMG report: Financial institutions, funds and corporates in Asia see increased appetite for sustainable investments, public and private sector cooperation is needed
Recent green policies set to help position Hong Kong as a leader in green and sustainable finance in Asia
HONG KONG, July 23, 2020 /PRNewswire/ -- Appetite for sustainable investments among financial institutions, funds and corporates in Asia continues to rise, and further public and private sector cooperation is needed, according to latest analysis by the Pacific Basin Economic Council (PBEC), ESCAP Sustainable Business Network (ESBN) and KPMG.
The report titled Catalyst for Change: Sustainable finance developments across Asia Pacific provides a snapshot of the current sustainable finance landscape across the Asia Pacific region and points of view from industry and NGO players on current developments and how to facilitate change.
Currently over four-fifths of total global sustainable investing assets are concentrated in Europe and North America, the report notes, according to the Global Sustainable Investment Alliance. Asia, especially outside of Japan, has seen relatively less investment, despite increased realisation within the investment community regarding the importance of sustainable investments. In order to meet the UN's Sustainable Development Goals by the target year of 2030, the UN Economic and Social Commission for Asia and the Pacific (UNESCAP) has estimated that the Asia Pacific region will need to spend US$1.5 trillion annually – the equivalent of five percent of GDP.
Dr. George Lam, BBS, President of ESBN, Chairman of ESBN Task Force on Banking and Finance and Vice Chairman of PBEC, says: "The rise in awareness of the urgent need for more sustainable investments has been accompanied by an increased understanding of the vast amounts of money needed to make the world climate-change proof. Governments will not be able to provision this amount of money through public finance alone and therefore must strengthen their cooperation with the private sector on mobilizing sustainable finance to fill the investment gap."
While Asia Pacific has yet to embrace sustainable finance to the same degree as Europe and North America, the momentum is strong and several initiatives are under way, and governments across the region via their central banks are starting to require greater disclosure of climate-related and other environmental risks from financial institutions and listed companies. Japan, Singapore and Hong Kong SAR are currently leading the way, according to the report.
Andrew Weir, Chairman of PBEC and Vice Chairman of KPMG China, says: "Sustainability is a key area of focus for boards, investors and the public. We see that Hong Kong has been quick to action compared to other international markets in the region. We also see a rise in the number of companies that are taking ESG factors into account in their investments."
In terms of recent green policies for Hong Kong, the HKEx recently launched the Sustainable and Green Exchange (STAGE) to support sustainable and green finance, while the Hong Kong Monetary Authority (HKMA) announced it will be placing priority on green and ESG investments and will develop a common framework to assess the "Greenness Baseline" of individual banks. The HKMA and SFC have also recently jointly established the Green and Sustainable Finance Cross Agency Steering Group to drive the management of climate and environmental risks to the financial sector and accelerate growth of this sector in Hong Kong.
Michael Walsh, Chief Executive, Pacific Basin Economic Council, says: "Public attitudes are changing fast and the sustainability debate has become an inclusive policy in boardrooms globally. There are significant opportunities in this region by adopting ESG standards. PBEC therefore supports and encourages further collaboration between institutions and industry leaders in this segment."
Pat Woo, a Member of ESBN Task Force on Banking and Finance and Partner, Head of Sustainable Finance, Hong Kong, KPMG China, says: "In order to drive the sustainability agenda forwards the private sector needs to avail of the policies in place and make it front and centre in their own business initiatives to capture these opportunities. Hong Kong is primed to be a leader in the region and take centre stage in green and sustainable finance. China's 14th Five-Year Plan is also expected to support sustainable capital as a way to drive corporates to act in a more sustainable manner. Looking ahead, we expect to see noticeable wider adoption of sustainable finance in Asia Pacific."
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KPMG is a global network of professional services firms providing Audit, Tax and Advisory services. We operate in 147 countries and territories and have more than 219,000 people working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such. In 1992, KPMG became the first international accounting network to be granted a joint venture licence in mainland China. KPMG was also the first among the Big Four in mainland China to convert from a joint venture to a special general partnership, as of 1 August 2012. Additionally, the Hong Kong firm can trace its origins to 1945. This early commitment to this market, together with an unwavering focus on quality, has been the foundation for accumulated industry experience, and is reflected in KPMG's appointment for multidisciplinary services (including audit, tax and advisory) by some of China's most prestigious companies.