Asean banks must do more in climate change fight: WWF, NUS study

WONG KAI YI Business Times 3 Oct 17;

SOUTH-EAST Asia's banking regulations and bank practices do not reflect deep commitments to fighting climate change, according to a report by the World Wide Fund for Nature (WWF) and the National University of Singapore.

The study surveyed 34 banks across Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam, and found that none of them disclosed climate or sustainability risks at their portfolio level.

Although 26 banks refer to sustainabiltiy in their strategy or vision, only 12 of them acknowledged the importance of climate risk for society and business, WWF said.

WWF found Asean banks to have good corporate governance foundations upon which to build environmental, social and governance (ESG) strategies, but found regulators were lagging in incentivising or penalising quicker ESG incorporation and standards.

On a national level, WWF found that supporting regulatory frameworks for sustainability reporting and corporate governance were present in all six surveyed countries. However, more could be done to coordinate sustainable finance regulations across Asean, due to the irregular nature of their implementation.

In Singapore, the three banks surveyed - DBS, OCBC and UOB - disclosed efforts to integrate sustainability concepts into their business, and distinguished between direct and indirect ESG footprint of their business actitivities. They have also made progress in recognising environmental issues such as deforestation, biodiversity loss and human rights.

More could be done to integrate environmental and safety (E&S) factors into mainstream capital allocation decisions, the study said.

The WWF called upon Asean regulators to implement prescriptive and timely sustainable finance guidelines to ensure the sector works towards those common goals.

Jeanne Stampe, WWF's head of Asia finance and commodities, said: "Countries will not have any chance of meeting their commitments to the Paris Climate Accord and the UN Sustainable Development Goals without the finance sector playing its part. There remains four years from now to stay below a 1.5 degrees (Celsius) temperature rise as adopted in the Paris Agreement. Banks must therefore act now and develop robust sustainable banking practices within the next 12 months."

Professor Tommy Koh, Ambassador-at-Large at the Ministry of Foreign Affairs and champion of the United Nations Environmental Program, urged the finance sector to take necessary measures and find solutions against the looming spectre of Asean's food, water and physical security being at risk.

"Banks have the power and responsibility to influence business practices and transform the region's approach to development," he said in a statement.