Finextra participated in the Singapore Fintech Festival’s session titled ‘Scaling Sustainable Finance for a Green Recovery,’ featuring insights from experts at Ecosystm, FIL Asia, HSBC, SDG Impact Japan, and WWF Singapore. The discussion focused on the financial innovations necessary for achieving social and environmental benefits while ensuring attractive returns.
Amit Gupta, CEO of Ecosystm and session moderator, emphasized the urgency of reaching net-zero targets, stating, “Climate financing needs to expand five to eight times over the next three decades.” Encouragingly, investment in sustainable finance is growing swiftly. Bloomberg forecasts that global ESG assets could surpass $53 trillion by 2025, making up over a third of the projected $140.5 trillion in total assets under management.
### Commitment to Net-Zero Goals
HSBC has publicly pledged to allocate between $750 billion to $1 trillion for sustainable financing over the next eight years. Zöe Knight, managing director and head of the HSBC Centre for Sustainable Finance, stressed the importance of understanding clients’ transition plans across various sectors to facilitate the necessary investment flows.
Mobilization is critical; financial institutions must engage collaboratively to broaden participation. To address this, HSBC is developing a public finance initiative, ‘Fast-Infra,’ aimed at accelerating sustainable infrastructure transitions. Knight highlighted the importance of establishing a labelling system that clarifies sustainability metrics for institutional investors.
To support sustainable projects in Asia regarded as “marginally bankable,” HSBC has launched a $150 million seed funding platform that will ultimately distribute over $1 billion in loans over five years, creating a robust project pipeline.
### The Challenge of Impact Measurement
Despite these bold commitments, some sustainable investments made in the past few years have failed to yield visible results, according to Sasja Beslik, head of sustainability at SDG Impact Japan. He raised concerns about whether this lack of impact is due to project efficacy or simply delayed outcomes. Beslik advocated for the creation of “next-generation funds” with clear targets that are regionally and sector-focused.
### Emphasizing Quality Metrics
Marty Dropkin, head of Asian Fixed Income at FIL Asia, echoed the need for both quality and quantity in sustainable investments. “It’s crucial to measure outcomes effectively,” he stated, urging for more tangible activities within investment portfolios. FIL Asia aims to halve its investment portfolio’s carbon emissions by 2030 and achieve net-zero status by 2050, but Dropkin stressed the importance of concrete actions behind these targets.
The divergence of sustainability standards across stakeholders complicates investment quality. R. Raghunathan, CEO of WWF Singapore, noted that varying assessment criteria lead to suboptimal funding allocations. This inconsistency might explain the less-than-satisfactory results seen thus far.
### Future of Sustainable Finance
Beslik optimistically predicted a revolution in sustainable finance within the next three to five years, suggesting that new products will better align with the complexities of global challenges.
Next-generation ESG products must provide both financial returns and environmental benefits by making nature “bankable.” Beslik called for greater regional collaboration and alignment between the EU, US, and Asia, emphasizing the need for transparency and reliable metrics.
Data and technology will be pivotal for enhancing transparency in sustainable finance. Dropkin noted that existing datasets often lack granularity, calling for alternative ESG data sources. Knight added, “We require forward-looking datasets that enable precise emissions comparisons across sectors, accounting for the lifecycle context of facilities.”
### A Transformative Era Ahead
Raghunathan concluded by expressing optimism about the forthcoming decades: “The potential for unprecedented transformation in humanity is on the horizon, marking the beginning of a new industrial revolution.”