As the world grapples with the urgent need to address climate change and transition to a sustainable future, the role of sustainable financing has taken centre stage.
The transformative power of finance in driving a positive impact on the environment has become increasingly apparent. From governments to corporations and financial institutions, there is a growing recognition that every investment decision can shape the trajectory of our planet.
The need to transition to a net-zero economy has never been more critical. The staggering 50 gigatonnes of greenhouse gases emitted into the environment each year demand immediate action.
Achieving net zero, the state where annual greenhouse gas emissions are reduced to zero, will require a staggering US$100 trillion worth of investments by 2050. This ambitious target necessitates collaboration and a collective effort from various stakeholders, including governments, regulators, financial institutions, investors, consumers and real economy players. Together, they can pave the way for a greener future and change the course of history.
MISALIGNMENT CHALLENGE
While countries worldwide have set ambitious goals to combat climate change, a misalignment often exists between national commitments and the global net-zero pathway. This misalignment poses a challenge to achieving a sustainable and resilient future.
A “just transition” approach is essential, which carefully balances socioeconomic challenges alongside net-zero ambitions, ensuring a fair and orderly transition across regions.
One country at the forefront of sustainable development is Thailand. Its drive to create a sustainable future includes a commitment to reducing greenhouse gas emissions by 30-40% by 2030, aiming for carbon neutrality by 2050, and achieving net-zero emissions by 2065. Thai companies are also making significant progress in environmental, social and governance (ESG) efforts, gaining international recognition for their commitment to net-zero emissions by 2050.
To make a meaningful impact on the future of our planet, governments and regulators play a crucial role in crafting robust policies and roadmaps for sectorial decarbonisation. They have the power to shape impactful policies that drive demand for green products, foster new markets centred on decarbonisation technologies, and ensure the availability of green production inputs.
Additionally, governments can apply innovative financing models and incentives to support climate technology pioneers and create an environment conducive to sustainable finance.
Corporations and the private sector must also step up their efforts and make credible commitments to reduce their carbon footprint. By setting science-based net-zero targets and action plans aligned with those of governments, businesses can lead by example and inspire others to follow suit. Large corporations, in particular, have the power to influence their value chains and supply chains, encouraging sustainability across the board.
KEY ROLE FOR FINANCIERS
As a key enabler of sustainable finance, the financial sector has a vital role in supporting the transition to a low-carbon economy. Financial institutions can actively manage climate risks, align their financing and investment activities with net-zero goals, and develop innovative financial solutions that have a direct impact on the real economy.
By scrutinising the environmental impact of the projects they finance, the loans they provide and investments they make, financial institutions can ensure that every financial decision contributes to a greener future.
With a commitment to integrating sustainability into its business practices, offering sustainable products and services and upholding corporate responsibility, UOB is demonstrating its dedication to creating lasting value for our world.
The bank has developed comprehensive Green Umbrella Frameworks, encompassing sustainable finance for green buildings, smart city sustainable financing, green financing for the circular economy, sustainable trade finance and transition finance. These frameworks provide end-to-end financing solutions for various industries, supporting the transition towards a more sustainable future.
In conclusion, unlocking sustainable financing is crucial for paving the way to a greener future. The global pursuit of net zero and the collective efforts of governments, corporations and financial institutions holds the potential to combat climate change and create a world where the economy and the environment can thrive in harmony.
With countries like Thailand taking bold steps and financial institutions leading the way, the momentum for sustainable finance is growing. It is time for all stakeholders to seize the moment and work together towards a sustainable and inclusive future.
Tan Choon Hin is the President and CEO of UOB Thailand.