Call for firms to help bridge region's green financing gap

There is often an initial mismatch between policymakers' approach to sustainable projects in emerging markets and what investors are willing to put their money into, said the International Finance Corporation's (IFC) vice-president for Asia and the Pacific yesterday.

Mr Alfonso Garcia Mora said green investment frameworks that resonate with investors and have clear standards that can apply across projects will spur funding.

He told a panel discussion at the inaugural Singapore Sustainable Investing and Financing Conference (SSIFC) that blended finance - a mix of various sources of capital to support sustainable projects in developing countries - can reduce the risk of entering new sectors.

Sembcorp Industries group chief financial officer Eugene Cheng - who was also a panellist - said corporate-based financing like green or sustainability-linked bonds allow funds to be deployed quickly.

Fellow panellist John Eric Francia, who is president and chief executive of AC Energy, said it is important for the term of a green bond to match a project's investment horizon: "In the space of green infrastructure, the longer the better."

The discussion was moderated by Ms Jennifer Tay, partner and infrastructure leader at PwC Singapore. Its parent event wrapped up the Ecosperity Week sustainability conference organised by Temasek.

Finance Minister Lawrence Wong said in his opening remarks at the SSIFC that Singapore has potential to become a carbon services and trading hub for the region.

Asean needs about US$200 billion (S$271 billion) in green investments annually to 2030.

Mr Wong also called for more private sector players to seek opportunities and partnerships in blended finance to address climate change financing collectively.

He said the finance community plays a key role in facilitating investments in renewable energy and carbon neutral technologies.

But he added that it needs to do more to enable the transition to a low-carbon future while investors need greater clarity about definitions of green projects to ensure these activities truly help with decarbonisation. "This will... help close the sizeable financing gap."

Better data management will also help companies and investors measure their progress towards sustainability goals, as well as the impact of their operations and investments, added Mr Wong.

"Besides good data, we need to implement a consistent set of global standards for disclosures and reporting," he said, noting that this will mitigate greenwashing, where organisations give the impression that they are environmentally sustainable when they are not.