A WWF report has found ASEAN banks lack urgency to respond to climate change and environmental degradation.
WWF’s 2019 Sustainable Banking Assessment (SUSBA) has found that the 35 ASEAN banks assessed are not responding fast enough to sustainability threats, nor are they actively supporting the transition to a low carbon and sustainable economy. This is based on the level of environment, social governance (ESG) integration measured by the WWF.
Currently ASEAN economies remain highly dependent on fossil fuels and 91 per cent of ASEAN banks continue to finance new coal-fired power plants.
The report states only nine per cent of banks have no-deforestation policies, despite being home to some of the world’s deforestation hotspots in Greater Mekong, Sumatra and Borneo, and also that ASEAN banks are not adequately managing water-related risks, with only 17 per cent recognizing water risk and none requiring clients to conduct water risk assessments.
It also finds that only nine per cent of banks have developed a strategy to manage climate-related risks or conducted climate-risk assessments.
According to Jeanne Stampe, WWF’s head of Asia sustainable finance: “ASEAN’s economies are very much interdependent, which magnifies the effects of climate change and environmental destruction. To ensure that businesses are resilient and the people of ASEAN have a secure future, ASEAN banks need to manage climate and other material environmental risks and opportunities in their portfolios”.
Investors are increasingly engaging with banks on their management of climate and environmental risks. Alistair Thompson, director of First State Investments (Singapore) said: “The WWF Sustainable Banking assessment has proven to be a valuable tool for us in ASEAN. It allows us to track where progress is being made, or not, and the areas in which investors like ourselves can push for improvement.”