Green debt issued in region doubles to $11 billion last year

Singapore emerges as a leader, issuing 55% of such debt in Asean

Sustainable financing is gaining traction in South-east Asia, with green loans and bond issuances rocketing across the region last year and Singapore leading the way, a new report noted yesterday.

The amount of green bonds and loans issued in the region hit US$7.8 billion (S$11.1 billion) last year, almost double the US$4.1 billion in 2018.

Singapore also rose as a regional leader in sustainable financing, contributing 55 per cent of Asean green debt issuance last year, up from 29 per cent in 2018.

The region now has 39 green debt issuers, with 20 of them issuing 32 green debt instruments last year, said the report from HSBC and the Climate Bonds Initiative, a non-profit organisation that promotes large-scale investment in the low-carbon economy.

This growth in green financing is also reflected globally, with issuance of green debt rising from US$171 billion in 2018 to US$258 billion last year.

The report noted that regionally, financial corporates have become the largest issuer type for green bonds, overtaking non-financial corporates and sovereign issuers.

The proceeds from green debt issuances mostly went into sustainable buildings, followed by the development of renewable energy.

They were also channelled into transport, water, waste and land use.

Mr Jonathan Drew, managing director of sustainable finance at HSBC Asia-Pacific, said: "It's heartening to see that green instruments are on the rise in South-east Asia as it demonstrates that the region is responding to issues linked to environmental degradation."

However, he noted that the findings also reveal the work that still needs to be done.

Issuance in the region represented 3 per cent of the global amount of green debt and 12 per cent of the Asia-Pacific total.

Mr Drew added: "Action now, to restart economies on a lower carbon pathway, is the key to avoiding a climate crisis and the associated costs of crisis response, and bring about the huge benefits of a... more resilient future of opportunities.

"Cooperation between governments, institutions and corporates across South-east Asia can deliver this, and finance has shown it has a critical role to play."

The Asian Development Bank introduced a programme last month to create the necessary ecosystems for green local currency bonds to develop infrastructure in the region.

Mr Sean Kidney, chief executive of the Climate Bonds Initiative, said: "Citizens know this has to be a green era... Some governments are now acting, in Europe, China and Singapore. These policy shifts will have an impact. Regional governments, companies and banks have to get ahead of that wave of change.

"The report clearly reflects that platforms now exist (for) green infrastructure, economic development and national growth paths across the region."

A version of this article appeared in the print edition of The Straits Times on April 17, 2020, with the headline 'Green debt issued in region doubles to $11 billion last year'. Print Edition | Subscribe