During a recent sustainable finance panel at Sibos 2024, Chuaoni Huang from BNP Paribas highlighted a growing interest in sustainable bonds, noting that the global supply exceeds $800 billion, with approximately 20-25% originating from the Asia-Pacific region, particularly Asia.
Oliver Zhang, a partner at EY, moderated a panel entitled “Climate Change, Resilience, and Social Impact,” featuring Dr. Shi Rong from the UN Development Programme (UNDP) China and Athina Chatzi from Temenos.
Dr. Rong opened the discussion by defining climate resilience as the capability of individuals, communities, and economies to anticipate, withstand, and recover from climate-related challenges. She pointed out a concerning trend: funding for climate adaptation has seen a decline, dropping from 7% in 2020 to 5% by 2022. She emphasized that while climate adaptation tends to be overshadowed by mitigation efforts, there is ample room for progress on both fronts.
Chatzi, representing the vendor perspective, underscored the necessity of cross-industry collaboration, comparing climate resilience to a finely tuned orchestra where every participant, from the conductor to the instrumentalists, must work in concert to maintain harmony.
Huang elaborated on BNP Paribas’s commitment to sustainability, citing the company’s decision to cease financing coal development following the Paris Agreement and its robust decarbonization goals for 2030. Regarding green bonds, she noted the substantial growth of the sustainable bond market, now valued at $810 billion, signifying a strong demand for sustainable financing.
Regarding the 20-25% contribution from APAC, Huang remarked on the compelling stories emerging from Asia, reflecting the green capital expenditures across various countries and industries. She pointed out that nearly 60% of the $810 billion supply is comprised of green bonds, primarily allocated toward renewable energy, low-carbon transportation, and green buildings.
Shifting the conversation, Dr. Rong outlined the UNDP’s initiatives to ensure a just transition that aligns with environmental and social goals, highlighting the importance of avoiding regressions in Sustainable Development Goals (SDGs). She stressed the necessity of protecting those adversely affected by transitions and ensuring equitable access to the benefits generated by the green economy, allowing everyone to partake in its growth.
For instance, she noted that China’s transition from coal could lead to approximately 1.3 million job losses in the sector over the next decade, disproportionately affecting women. To create inclusive transition plans, Rong advocated for the incorporation of unemployment strategies and social considerations by businesses, wherein financial institutions play a crucial role.
Chatzi discussed how technological advancements in cloud computing and AI can enhance climate resilience, sharing insights on Temenos’s initiatives to bolster this resilience. She explained that they collaborate with a climate tech company to assess their software’s carbon footprint and train developers in sustainable engineering practices. Furthermore, they encourage hackathon participants to consider climate change in their designs, creating a holistic approach that not only manages risks but also seizes opportunities for innovation and growth.
She added that transitioning to cloud computing and AI could lower operational costs, allowing resources to be redirected toward expanding access to underserved communities, where mobile banking is vital for financial inclusion.
Dr. Rong also highlighted various projects the UNDP is undertaking to address climate resilience, including establishing a task force for SDG finance technology, collaborating with new development banks, and launching a biofinance initiative with the Shanghai and Shandong governments aimed at supporting biodiversity conservation. Additionally, they are facilitating the low-carbon transition in China’s agriculture and food systems.
“We are also developing intelligence tools globally, collaborating with 40 countries to uncover business opportunities aligned with SDGs. In China, we released the SDG Investment Map last year, identifying around 18 key investment areas, focusing on the circular economy and renewable energy to support the country’s decarbonization objectives. Our efforts utilize extensive research to inform ongoing initiatives and opportunities,” she concluded.