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Green bond market ripe for ESG investing, finds Asian Financial Forum

Green bond market provides significant opportunities
Green bond market provides significant opportunities. Photo: Pexels

Significant opportunities in the green bond market and unified carbon emissions was earmarked as a way forward for ESG investing in Hong Kong at the Asian Financial Forum (AFF), writes Fiona Keating

Greater involvement of boards and executive directors in ESG concerns was also found to be effective in moving a company towards a more sustainable outlook, were key takeaways at the AFF conference held in January.

Tian Guoli, Chairman, Executive Director, China Construction Bank, said: “In 2022, Asia will likely become a force to boost the development of sustainable development in a world full of uncertainties. Hong Kong will certainly play a more crucial role as an international financial centre.”

However, lack of a homogenous framework and standardised guidelines for measuring ESG factors was cited as a continuing test.

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Confusion surrounding ESG standards was seen as a major challenge for business, with 33% of respondents at the Asian Financial Forum (AFF) reporting this as a barrier to implementing more ESG-friendly policies.

A difficulty in balancing ESG practices and business goals was viewed as a hurdle for 22%, while 43% had an optimistic outlook on the economy.

Green bond market on the rise

The sectors with the most opportunities for green investment in Asia were identified as green energy (45%), real estate and construction (16%), transportation infrastructure (14%) and agriculture and food (14%).

A survey presented by PwC and HTDC (Hong Kong Trade Development Council) indicated that more than 50% of respondents thought that neglecting ESG factors could have a negative impact on the business, affecting their ability to retain clients or attract new ventures. Almost 40% believed it could harm their firm’s reputation.

Mark Carney, United Nations special envoy on climate action and finance spoke at the conference, saying that governments need to step up with “ambitious, credible and predictable” policies to match their pledges.

The green bond market set to rise in 2022 on the back of China’s initiatives to broaden the investor base and boost bank lending to energy transition schemes

“Very importantly, countries are encouraged to enact ‘deep decarbonisation’ policies such as the phase-out of internal combustion engine vehicles by 2030 and legislate carbon pricing to deliver certainty. This is about giving greater certainty to investors and businesses, so they can pull forward with investment, smooth adjustments and drive jobs and growth upwards while they force emissions downwards.”

“Finance is stepping up, the system is being changed, and there are enormous opportunities now for countries and companies, from affordable green power to zero-emission steel to low-carbon hydrogen and beyond. The financial sector has moved from being a mirror that reflects a world that hasn’t been doing nearly enough to becoming a window through which ambitious climate action can deliver a sustainable future,” Carney added.

In which sector do you see the most opportunities for green investment in Asia?Polling result What is the most significant barrier preventing your company/institution from implementing more ESG-friendly policies?Polling result
Green energy45% The difficulty in balancing ESG practices and business goals22%
Transportation infrastructure 14% Lack of ESG understanding among key personnel 16%
Water and waste treatment9% Lack of unified, easily understandable ESG standards33%
Reforestation2% Poor data quality and consistency in terms of ESG performance evaluation14%
Real estate and construction16% Lack of commitment to ESG practices among senior management6%
Agriculture and food14% Insufficient government support 9%

What are your views on the green bond market? Get in touch.

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