FINANCIAL INSIGHT
Green finance in the Asia Pacific region to grow amidst data and disclosure gaps But is it growing fast enough for the region to achieve climate goals?
Green finance forms a part of Singapore’s Green Plan 2030
G
reen finance is proving to be a rapidly growing sector in 2021. Based on data from the Climate Bonds Initiative (CBI), 2021 green bond issuances might exceed that of last year, with $219.7b issued for the first half of 2021 compared to the US$290.1b issued in 2020. Bonds issued from the Asia-Pacific made up more than a quarter of the first half’s figures, at US$51.9b, just a few millions short from the US$53.2b issued for the entire year of 2020. China issued approximately US$22b worth of green bonds in the first half, exceeding the combined issuances from South Korea (US$5.9b), Japan (US$5.5b), Singapore (US$5.2b), and India (US$4.6b). Separate from Mainland China’s, a total of US$3.2b worth of green bonds was issued from Hong Kong SAR. Hong Kong is taking its sustainable finance strategy seriously, with the Hong Kong Monetary Authority-led Green and Sustainable Finance Cross-Agency Steering Group focused on implementing five near-term action points to help the region achieve carbon neutrality before 2050. Green finance strategies Green finance forms a part of Singapore’s Green Plan 2030, as the Lion City aims to turn itself into the centre for environmentally sustainable finance in Asia. Approximately SG$19b projects from the public sector has been identified for green financing, including the Tuas Nexus integrated water and solid waste treatment facility. 18
SINGAPORE BUSINESS REVIEW | DECEMBER 2021
Investment in sustainable financial instruments, including green bonds, are on the rise globally. Standard Chartered, in its Sustainable Investing Review 2021, noted that 13% of emerging affluent, affluent, and high net worth investors have sustainable investments making up more than a quarter of their portfolio. An approximate 61% of these investors have placed funds in a sustainable investment solution. Leon Ong
Investing in green bonds Market uncertainties and an increasing awareness on the inevitability of climate change are amongst the reasons that investors are keen on green bonds, said KPMG Partner and Head of Financial Services Anton Ruddenklau in an interview with Singapore Business Review. “Investors effectively, are spending less and getting higher returns on green bonds, than they are on other bonds. And that’s also showing up in the level of oversubscription on bond issuance. So everyone wants bonds right now, they want certainty. They’re the most popular category of bond versions right now. So that bodes really well for your supply and demand and growth going forward,” Ruddenklau said. Businesses are also keen on issuing green bonds for a number of reasons, KPMG Partner for Financial Services Advisory Leon Ong told Singapore Business Review. “It’s a positive story for the company trying to do the green bond issuance. Also, by doing such a thing, you do tend to find like-minded investors and individuals out there. You open up to a part of the population of investors
