Bankers on a mission to drive sustainability
ANZ aims to increase the popularity of sustainable finance in Asia
As populations across Asia expand and aspirational middle-class households proliferate, investments in renewable energy, new technology and energy efficiency will be crucial to support this development.
But without the capital to finance it, the current sustainability momentum will decline; therefore corporates and the financial sector must step up the roles they play in advancing sustainable development.
Operating in markets that are on the frontline of climate vulnerability, Australian lender ANZ has strengthened its capabilities to support customers in capturing growing momentum in the sustainable finance loan and bond markets. That commitment has expanded to Asia where the bank has an established presence of more than 40 years.
As The Asset recently reported, the Melbourne-headquartered bank named Stella Saris head of Sustainable Finance, International. At their annual ANZ Finance & Treasury Forum in Singapore last week, Saris and Katharine Tapley, head of Sustainable Finance at ANZ, spoke to this publication about their hopes for the difference that sustainable banking can make across the region.
The ANZ Sustainable Finance team is currently made up of eight people, with seven in Australia, and Saris, who is based in Singapore to run sustainable finance for the international business. That remit also covers Europe and North America as well as Asia.
“Our mission is to work with our customers to transition them to a lower carbon economy, a more sustainably developed economy and introduce them into sustainable finance markets and transactions,” says Tapley.
“So on a practical day-to-day basis we’re looking at things like green loans, green bonds and supply chain type products in Australia, New Zealand, and Asia,” she adds.
According to Tapley, the green bond markets in Australia and New Zealand have taken a little time to really come to life, but there is now an increased appetite from borrowers backed by significant investor demand.
The effects of climate change are becoming apparent in Australia, requiring communities to adapt to worsening drought in parts of the country.
Last year, ANZ revised its climate change statement, a high-level corporate roadmap to guide the bank in meeting the social, environmental and economic challenges posed by climate change while supporting its customers to transition to a low-carbon economy.
As they ramp up their infrastructure spending, despite the lack of direction from the federal government, several state governments in Australia have already issued green bonds.
The New South Wales Treasury Corporation (A$1.8 billion/US$1.21 billion, 2018), Treasury Corporation of Victoria (A$300 million, 2016), and Queensland Treasury Corporation (A$750 million 2017, A$1.25 billion, 2019) have all issued green bonds.
This initiative has now penetrated the corporate space where green bonds and loans are growing in the building and transportation sectors and are starting to shift into the agricultural domain as well.
The development of green/sustainable financial instruments by corporates is growing in Asia, which many feel will soon dominate the green/sustainable finance space.
Saris says her bank is seeing increased interest from CFOs and treasurers about signaling their sustainability credentials through products in the green loan sector.
“In Asia you've seen the green loan and the sustainability link loan market probably grow faster than the green bond market, especially in the last 12 months. Not only in Singapore but Hong Kong has also seen strong green loan issuance,” says Saris.
She is confident that Asean nations will also benefit greatly from the advances that technology has brought to renewable energy solutions. More significantly, the cost has fallen too.
The fact that technology is making new energy fixes cheaper and more accessible makes the argument about subsidizing renewables fall away and consequently, renewables is seen as a more competitive option.
“We've seen that in India where new solar projects are as competitive as when you build a coal-fired power plant, so that's transformational,” Saris adds.
For countries like Indonesia and the Philippines that are growing and have access to strong solar resources, they don't have to rely, especially in the Philippines, on the importation of coal or gas.
As well as being environmentally healthier, that's a real benefit for the country’s balance of payments as well.
As Katharine Tapley points out while sustainability is a megatrend, climate risk and transitioning to a low carbon economy are a very key part of it.
She emphasizes however that there are broader issues to deal with particularly social inequality, and the need and access to essential social services like health and education.
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