Page 5 - AsiaElec Week 39 2021

AsiaElec COMMENTARY AsiaElec

through greenwashing. governments and investors to take the first steps
“As the cost of extreme weather disasters, on the road to meeting the targets set out in the
adaptation investment and transition invest- SEB report.
ment start to soar, we believe that investors In particular, developed countries must meet
will demand a stronger additionality (or mar- the goal of $100bn per year of annual climate
ginal impact) from their sustainable financial finance invested in the developing world, after
investment.” falling $20bn short in 2020., according to OECD
Stronger and more obvious relations are figures.
needed between a green investment product E3G underlined that multilateral public
and its impact on the energy transition in the finance has become an increasingly important
real world. component of overall climate finance. Indeed,
“This suggests to us that there may be a need the IEA has calculated that $1tn per year is
for a second strand in sustainable financial needed by developing economies by 2030 to for
investment alongside ESG with a more direct them to play a part on the global transition.
focus on financing transition investment and E3G stressed that such multilateral invest-
a more pragmatic approach to the reputational ment flows to leverage the higher risks faced
risks of calling something green or sustainable. by private finance of investing in developing
The challenge for the financial sector is to con- economies.
tinue to innovate and develop funding tools that
strengthen such a link from savings to real world
action,” the report said. Net zero
It could be possible to reach net zero by 2050, the
Green bonds report concludes.
The reported noted that growth in issuances had “It will require a very substantial increase in
declined over the summer with August 2021 see- investment levels. It is realistic because renew-
ing only an 11% increase over August 2020. able energy has all the hallmarks of a classic
However, even when accounting for this, technology revolution, most notably the learn-
SEB expects total sustainable debt issuances to ing-curve effect: prices are likely to continue
achieve or exceed USD 1.5tn in 2021 declining as we use more of them. However, at
The report found that green bonds issuance the current investment pace it would take too
continued to grow, although more slowly than long to complete it,” the report said.
in 2020, with July and August issues reaching The conclusions echo the warning of UN sec-
$55.9bn, up just 30% year on year. Total issuance retary general António Guterres in August, that
in the year to August reached $352bn, almost the world faces a Code Red on climate change,
double the $163.78bn issues in the same period and must invest in phasing out existing coal by
of 2020. Growth was strongest in Asia and north 2040, ending all new fossil fuel exploration and
America, while in Europe it was stagnant, per- production immediately and shifting fossil-fuel
haps as investors waited for the EU’s new Green subsidies into renewable energy.
Bond Standards, the report suggested. If this is to be done, then it will require the
Other types of bonds, such as social bonds emerging business of sustainable investment to
with 155% growth to $18.9bn in July and August, reach maturity.
and Sustainability bonds with 72% growth to “The financial industry will play a crucial role
$19bn, saw fast growth from lower bases. in helping to raise funds for these investments,
not least through sustainable financing solutions
Multilateral support such as sustainability-themed bonds and loans,”
Finally, the think tank E3G wrote in the report said Gregor Vulturius, co-editor of The Green
that the COP26 conference in Glasgow in Bond report and advisor at Climate & Sustain-
November was the first opportunity for global able Finance at SEB.™

Week 39 29•September•2022 www. NEWSBASE .com P5