“Investors are chasing sustainable bonds to buy, and we think that over $800 billion worth of supply globally, around 20-25% of that global share comes from APAC, namely Asia in particular,” said Chuaoni Huang of BNP Paribas during a sustainable focused panel session at Sibos 2024.
Oliver Zhang, partner, EY moderated the panel ‘Climate change and resilience and social impact’, which also included panellists Dr Shi Rong from the UN Development Programme (UNDP) China and Athina Chatzi from Temenos.
Rong opened up the discussion by stating what climate resilience means to her: “I think climate resilience means that individual enterprises, communities, or economy have the resources or ability to anticipate, absorb, or recover from climate-related stress or shocks.”
Rong highlighted how climate adaptation funding has decreased in the past few years, from 7% in 2020 to 5% in 2022. She noted that climate adaptation is often overshadowed by climate mitigation, but there is more the community can do to confront both.
Chatzi spoke from a vendor point of view, highlighting the need for cross-industry collaboration, and likening climate resilience to a “well-tuned orchestra”, where every member, from the maestro to the triangle, must be in key to keep the harmony.
Huang stated that BNP Paribas has been making progress since the Paris Agreement, and no longer finance coal development, and have made serious commitments to 2030 decarbonisation goals.
When asked about green bonds, Huang pointed out that the sustainable bonds market is growing, reaching $810 billion globally, which indicates that the demand for sustainable financing is significant.
Regarding the 20-25% of this coming from APAC, she commented: "We have really good emerging Asia stories here, and that reflect the green CapEx that each of the countries and industries have in place. In that $810 billion, almost 60% of the supply are in the form of green bonds. The most frequently allocated areas include renewable energy, low carbon transportation, and green buildings.”
Shifting gears, Rong detailed what projects the UNDP is embarking on to ensure the just transition links the environmental and the social, emphasising that achieving sustainable development goals (SDGs) cannot come at the cost of regression in other SDGs.
She furthered: “If we want to manage equitable and inclusive transition, we need to ensure that no one is actually left behind. In order to achieve that, I think there are two sets of efforts that we need to do. One is that we need to protect those who are negatively affected, and second is that we need to make sure that all the opportunities, all the benefits that open up by the green transition, needs to be accessible to everyone, so that everyone can benefit from the green economy growth.”
As an example, she points to China’s energy transition, and that in the current trajectory there will be 1.3 million job losses in the coal sector within the next decade, which will have a disproportional impact of the women in the sector, while also significantly impacted men. She says to make transition plans inclusive, there needs to be unemployment plans and social considerations from businesses, which is where financial institutions can make a big difference.
Chatzi provided examples of how cloud computing and AI technology could enhance climate resilience in the sector, outlining initiatives that Temenos is engaging in to bolster climate resilience: “We engage with a climate tech company which is specialising in assessing the carbon footprint of software. As we calculated our baseline, then we started investing on training our developers to practice, to use sustainable software engineering practices in the development. At the same time, during our hackathons, we encourage our teams to think about climate change when they design their prototypes. This holistic approach ensures that we don't only identify the risk, mitigate, or adapt, but we also use it as opportunity to drive growth and innovation.”
She continued that moving to cloud computing and AI technologies can reduce operational costs that can be redirected to expand their reach to underserved communities, where mobile banking is essential for inclusion.
Rong spoke on the projects and collaborations that UNDP’s has been managing to confront climate resilience, such as a taskforce for SDG finance technology, collaboration with new development banks, a biofinance initiative in collaboration with the Shanghai and Shandong governments that map out resources to support biodiversity conservation, and supporting the low carbon transition of China’s agriculture and food system.
“We also offer intelligence tools globally; we are working with 40 different countries and trying to highlight and identify business opportunities that is aligned with SDGs. In China, we are doing similar studies. Last year, we released a report called SDG Investment Map that identified around 18 investment opportunity areas across two key sectors, mainly on the circular economy and also renewable energy and trying to support China's due carbon goals. So there’s a lot of research and ongoing work that we are doing.”