WWF urges Asean banks to 'go green'

WWF urges Asean banks to 'go green'

The World Wildlife Fund (WWF) might be associated in the public eye with saving pandas, but a new report from the environmental organisation takes on the banking system.

The report, the 2019 Sustainable Banking Assessment, urges Asean banks to adopt more conservation-minded policies. It warns of "existential threats such as climate change and environmental degradation, which could potentially lead to financial instability and social unrest".

Corporations and governments are often viewed as the bad guys when it comes to environmental issues, but it's the banking system that underpins economic activity. Essentially, WWF wants banks to avoid lending to any environmentally unsound businesses and offer "green" investment portfolios to its customers.

The report covers 35 banks in Asean, including seven in Thailand. It assesses the banks on 70 criteria, ranging from "sustainability strategy and stakeholder engagement" to "environmental, social and governance (ESG) integration in products and services".

Of the 35 banks assessed, only four banks from Singapore and Thailand fulfilled at least half of the criteria, with 51% meeting less than a quarter. On the bright side, the report found some progress, with 74% of the banks showing improvements over the previous year.

Many of the issues are particularly pertinent to Asean. Ninety-one percent of Asean banks continue to finance new coal-fired power plants, with regional economies highly dependent on the fossil fuels that contribute to climate change.

Only 9% of banks have no-deforestation policies, despite the proliferation of deforestation hotspots in the Greater Mekong area, Sumatra and Borneo.

Just 17% of banks recognise water risk, a hot topic in Thailand. The report says the kingdom suffered 1.3 trillion baht of economic losses from the 2011 floods, and 40% of Bangkok is at risk of inundation by 2030.

Of the seven Thai banks surveyed, Siam Commerical Bank and Kasikorn Bank scored the highest marks. Thai banks performed better than their Asean peers -- with the notable exception of Singapore, which was far ahead -- and showed an improvement in most environmental criteria, especially staff training and performance evaluation.

"Thai banks showed more progress on [the] people aspect, meaning that Thai banks increasingly invested in building the capacity and resources to support ESG implementation and have conducted trainings on ESG for staff during the past year," said Pornradee Tangkaseranee, Sustainable Finance Manager for WWF Thailand. "This will benefit banks' future sustainable practices."

The Bank of Thailand is also praised, along with the central banks of Malaysia and Singapore, for joining the Network for Greening the Financial System.

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