Green finance grows across the region
Many companies and their leaders are increasing their focus on environmental, sustainability and governance (ESG) principles and taking steps to ensure such practices are embedded in the way they conduct business.
There are many reasons for this beyond the simple responsibility to act as a good corporate citizen. Businesses are also responding to growing pressure coming from customers, investors, regulators, employees, governments and other stakeholders.
Banks and financial institutions have an important part to play in hard-wiring ESG principles into their operations by being responsible lenders, expanding financial inclusion and helping customers and their supply chain meet agreed standards, as well as financing environmentally sustainable businesses.
Southeast Asia's banks have made good progress with green finance, achieving record levels of green, social and sustainable (GSS) debt issuance last year, according to the Asean Sustainable Finance State of the Market 2020 report from the Climate Bonds Initiative.
GSS issuance in Asean reached US$12.1 billion last year, up 5.2% from 2019. Cumulative GSS debt issued in the region since 2016 now tops $29.1 billion. Singapore leads the region with $11.9 billion, followed by Indonesia ($5.5 billion), the Philippines ($4.9 billion), Thailand ($3.9 billion) and Malaysia ($2.6 billion).
Singapore was also the largest Asean GSS issuer last year with some $5 billion worth of related bonds. Strong growth in Indonesia and Thailand was driven by sovereign and government-backed entities, and increased private sector activity with multiple Certified Climate Bonds issues, respectively. Thailand also received the Sovereign Green Market Pioneer award at the 2021 Climate Bond Awards ceremony.
Offerings of ESG bonds launched in the Thai debt capital market last year totalled 129.4 billion baht. Bangkok Bank was involved in more than 90% of these ESG issues. We also supported the Ministry of Finance in its inaugural launch of 30 billion baht in Sustainability Bonds, which was extended to 50 billion baht due to overwhelming interest from investors.
We focused on financing solar energy projects in various countries last year as part of our commitment to sustainable banking. This included participating in providing a syndicated loan for the development and operation of a 257-megawatt solar project at Hoa Hoi in Phu Yen province of Vietnam. The syndicated loan was the first Green B loan in Asia-Pacific to be certified by the Climate Bonds Initiative.
Making finance more sustainable involves a concerted effort from many actors, and Bangkok Bank's efforts in this area are just an indication of the good work being carried out by banks and financial institutions across the region.
Sustainable finance extends far beyond the remit of green bonds. Governments and regulators are helping to facilitate meaningful change in other areas by requiring listed companies to be more sustainable, and by providing investors with the information they need to make sustainable investments.
The positive direction Southeast Asia's listed companies are taking was underlined by the Corporate Knights 2019 sustainability disclosure performance ranking, which ranked the Stock Exchange of Thailand ninth out of 47 exchanges worldwide. The SET was the highest-ranked bourse in the Asia Pacific region, ahead of Singapore (24th), the Philippines (30th) and Indonesia (36th).
The record issuance of green bonds last year and the positive sustainability rankings of the region's stock exchanges demonstrate Southeast Asia's growing commitment to green finance. We will need to continue and intensify these efforts moving forward to ensure we can build back better after the pandemic and help ensure a sustainable future for our societies and generations to come.
Dr Thaweelap Rittapirom is a director and executive vice-president of Bangkok Bank. For more columns in this series, please visit www.bangkokbank.com