From green bonds to transition finance, Asian markets are experiencing a surge in sustainable financing, according to BNP Paribas.
The said increase in sustainable finance is brought about by supportive regulatory environments.
Green bonds, in particular, are gaining momentum, according to BNP Paribas. This paves the way for Asia to become the world’s second-largest issuer, set to account for 20% of the global supply in 2024.
“It is very encouraging to see asset managers take a science-based approach towards sustainable financing instruments, as well as the willingness of issuers to realise their ESG commitments via financing activities that support their action plans,” says Chaoni Huang, Head of Sustainable Capital Markets, Global Markets APAC at BNP Paribas.
Transition finance, which involves investing in the decarbonisation of polluting industries, is making significant progress in the region.
“This successful transaction marks a step forward in scaling up transition finance for carbon-intensive sectors in Asia”, Huang says.
BNP Paribas highlights that another tell-tale sign of Asia’s increasing maturity in sustainable finance is the uptick in biodiversity investments.
In a context where the International Energy Agency (IEA) expects fossil fuel imports in South Asia could jump by 50% by 2040, investments in renewable energy infrastructure are emerging as a priority for the region.
Fortunately, BNP Paribas says Asia holds great potential in the area due to supportive policies and favourable conditions across many of its economies.
The bottom line is that an increasing demand for ESG exposure and taste for green bonds show that Asian markets are ready to move on to the next step of their sustainable finance journey.
Shalen Shivpuri, Co-Head of Loans & Specialised Finance for APAC and Co-Head of Low Carbon Transition Group for APAC at BNP Paribas says, "the diverse landscape across Asian economies highlights how sustainability expertise, finance, financing know-how, and strong on-the-ground networks are all part and parcel to bringing complex, market-first sustainable infrastructure projects to fruition."
