Asean banks must work for climate action — report

MANILA, Philippines — A report by a conservation group said more actions must be done by the ASEAN banking sector to be able to fulfill commitments to climate change and sustainable development goals (SDGs) in the region.

The World Wide Fund for Nature (WWF) report noted that robust sustainable banking guidelines coupled with urgent action by banks are needed to prevent a looming environmental and social crisis that could cripple the region’s future economic growth.?    

The report, “Sustainable Banking in ASEAN: Addressing ASEAN’s FLAWS” by WWF and the National University of Singapore’s Business School’s Center for Governance, Institutions and Organizations (CGIO) found that national commitments to climate change and sustainable development are not well reflected in the practices of ASEAN banks, nor in the region’s banking regulations.?               

Professor Tommy Koh, ambassador-at-large at Singapore’s Ministry of Foreign Affairs and champion of the United Nations Environmental Program, said, “Banks have the power and responsibility to influence business practices and transform the region’s approach to development. With ASEAN’s food, water and physical security at stake, I urge the finance sector to take the necessary measures and be part of the solution.”?           

Even as ASEAN governments gear up to mitigate the impact of worsening environmental issues on their populations, banks continue to narrowly define and manage environmental risks. This contributes to environmental degradation such as climate change, which will exacerbate business risks for these banks and their clients over the longer term.?               

Through the report, WWF called on banks to expand their approach to environmental, social and governance integration. “This requires moving beyond managing short term risks toward embedding sustainability into their strategy and aligning their portfolios fully with the Paris Agreement and SDGs.”?               

While 21 of the 34 ASEAN banks analyzed acknowledge that the activities they finance can have adverse environmental and social impacts, none of the banks disclose how they manage climate or sustainability risks at the portfolio level. Further, even though 26 banks refer to sustainability in their strategy or vision, only 12 acknowledge the importance of climate risk for society and businesses, of which only one has senior level oversight of climate risks.?