Mobilising finance for a climate-positive future in Southeast Asia
Published on 4 October 2021
Published on 4 October 2021
Sustainability is gaining capital in Singapore and throughout the globe. A green recovery through sustainable finance is critical for Southeast Asia in effort to protect its environment, mitigate the impact of climate change, and meet the Sustainable Development Goals (SDGs) while reducing the risk of future pandemics or crises. Maybank has been at the forefront, driving this for several years now, and believes that this trend is now here to stay.
The last few decades have seen rapid growth and economic development for Southeast Asia, putting intense pressure on the region’s diverse biological resources. This is alarming considering it is one of the Earth’s three major biodiversity zones, as a tropical landscape with a total population of over 650 million people1 , and is far more densely populated compared to the South American Amazon and African Congo combined.
With an increased awareness on climate change, signs of positive transition in the region began to surface as trends show environment, social and governance (ESG) funds continue to outperform and attract capital. ASEAN has seen a significant growth in investors, strengthened by Singapore’s Temasek2 and Malaysia’s Employee Pension Fund (EPF)3 both of whom have been vocal in their support of ESG investing.
Since the Paris Agreement was adopted in 2015, governments in Southeast Asia as a whole are becoming more aware of the importance of balanced development. Significant efforts are being made to bridge the disparity between climate ambition and action. This is an aspect where the financial services sector can play a significant role to accelerate the world’s transition to sustainable practices and securing a more positive future for Southeast Asia’s forests and biodiversity.
Mobilising finance to protect the environment
Maybank has always known that as a financial services company, our influence extends far beyond financing and our immediate operations. This places us in a unique position to catalyse environmental change by engaging with the companies we lend to, invest in, and insure.
This ideology has received attention and appreciation by other financial institutions across the region. Recent research by global environmental non-profit, CDP, found that the top 20 Singaporean, Malaysian, and Indonesian banks alone represented 37% or USD 23 billion4 of total global lending to the Southeast Asia’s Forest Risk Commodity (FRC) sectors between 2011 and 2018. The FRC consists of goods or raw materials, like timber and palm oil, whose extraction or production may contribute to forest loss and environmental degradation, a segment that Singapore, Malaysia, and Indonesia heavily contribute to.
As one of ASEAN’s leading banking and financial services powerhouses with an established track record on green and sustainable initiatives, Maybank’s ability to direct capital strategically and open up ESG-compliant goals. We continue to manage the environmental and social risks associated with our lending and financing activities through our ESG Policy and have further enhanced our lending criteria for the Palm Oil sector in 2020.
Maybank is also working closely with our financing clients to enhance their ESG capabilities as a way to help connect the dots between industries, sustainability experts and interested parties. As part of these capacity-building and responsible lending practices, we offer sustainable financing activities focused on lower-carbon solutions for energy and green technology, and approved loans worth more than USD800 million for renewable energy projects in 2020 alone. This includes a deal in Negeri Sembilan, Malaysia where Maybank provides financing worth over RM374 million (USD90 million) to refinance the development of waste-to-energy facility that is slated to convert 600 tonnes of waste per day, generating up to 25MW of power.
Our deliverables in the area of ESG follow through from our sustainability journey over the years, which includes our financing commitments of ‘No Deforestation, No New Peat and No Exploitation’ (NDPE). Under this commitment we are determined to not provide financing to black-listed activities deemed not in line with the Group’s core values, and no financing of new coal activities while transitioning together with existing borrowers to achieve sustainable renewable energy mix over the medium-to-long-term. To this end, we are pleased to have had the opportunity to potentially partner City Developments Limited, a company known to drive innovative solutions in developing strategic low carbon and environmentally friendly buildings, to finance some of its many green development projects.
Humanising Financial Services for a climate-positive future
Solving the global climate crisis will require massive investment in low-carbon technologies and sustainable agriculture, which are enabled by the financial sector. Financial institutions must hence take responsibility in designing and delivering new financial tools, investment capital and industry knowledge that prioritises long-term value creation over short-term gains. This is a critical role that Maybank has recognised and embraced early on to realise the transition to a more climate-positive future.
We are determined to pursue these long-term sustainability commitments on our path towards becoming a regional ESG leader by 2025. Sustainability is one of our strategic priorities in our latest five-year business plan whereby we have set out 4 key commitments to achieve by 20255 .
As we evolve and move forward into 2021 and beyond, Maybank will continue to prove ourselves to be trustworthy and responsible stewards of financial services by holding fast to our core values which have brought us to where we are today. By being conscious that our actions must be directed by the needs of our stakeholders, which includes the environment, we will continue to meet the needs of communities whose lives we can impact, and in doing so, realise our purpose of Humanising Financial Services.
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