Embracing sustainable finance efforts

Embracing sustainable finance efforts - illustration photo

Vietnam is implementing a National Strategy for Green Growth and a National Green Growth Action Plan; with both initiatives backed by the financial sector’s action plan to implement the national strategy for green growth.

In Singapore, the Monetary Authority of Singapore announced a Green Finance Action Plan in November 2019 to make green finance a defining feature of the financial sector.

In Brunei, the government issued its Blueprint 2016-2025, with the goal of developing Islamic fund management credentials and promoting investment along the sustainable, responsible, and impact criteria.

The Securities and Exchange Commission in Thailand established a committee and a working group relating to sustainable finance in 2019 to engage representatives from various stakeholders, including the Stock Exchange of Thailand, government agencies, and industry associations.

Green finance, which refers to funds specialising in sustainable development projects such as renewable energy, are envisaged to witness more substantial growth momentum as governments across the globe are laying their focus on cutting pollution and greenhouse gas reduction.

Efforts to promote sustainable finance within the capital markets have so far been focused on introducing sustainable standards for products, disclosure templates for listed companies, and incentives to encourage the industry to adopt sustainable standards.

In the area of disclosures, stock exchanges in six member nations (Indonesia, Malaysia, Philippines, Singapore, Thailand, and Vietnam) have introduced sustainability reporting and issued guidelines for their listed companies. While still at a nascent stage, sustainability reporting is expected to continue to gain momentum in light of the growing demand for increased levels of transparency and accountability.

Last week, the 33rd ASEAN Capital Markets Forum Chairs’ (ACMF) Meeting virtually hosted from Hanoi has shed light on the key priorities for its Action Plan 2021-2025 to realise an inter-connected, inclusive, and resilient ASEAN capital market.

The key priorities are driving higher levels of transparency and disclosure; continuing with regulatory harmonisation; intensifying capacity building; amplifying communication and awareness; and strengthening cooperation and coordination.

The meeting also acknowledged the progress of the forum’s working groups in implementing the six short-to-medium goals identified in the Roadmap for ASEAN Sustainable Capital Markets.

Under the theme of sustainable finance, the ACMF will explore ASEAN-wide bond standards to facilitate issuance for sustainability-related goals. Mitigating climate change and sustainability are an imperative, and financing via the financial markets, including the capital markets, is a fundamental aspect to facilitating and promoting sustainable development.

Tran Van Dung, chairman of the State Securities Commission of Vietnam – who is also the chair of the ACMF 2020 – said, “Vietnam is taking collective approaches to attract more high-quality foreign funds towards fulfilling its sustainability agenda. Besides sustainable finances, efforts to promote the country towards becoming an emerging market is another goal.”

Furthermore, the top 20 ASEAN publicly-listed companies, honoured with an ASEAN Asset Class Award at the meeting included multinational corporations operating in Vietnam such as CIMB, Maybank, UOB, CapitaLand, Fraser, OCBC Bank, and Public Bank.

High-profile international investors are shifting their attention towards environmental, social, and governance criteria by implementing these requirements into their investment processes. Regulators also require more companies to disclose climate-related risks.