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Sustainable finance comes of age in Asia: Vigeo Eiris

25/07/2018

An ideal alignment of market forces and social trends are helping Asia make significant strides towards capitalising on the huge potential of sustainable finance, according to Juliette Macresy, Head of Greater China and Southeast Asia Markets, at Vigeo Eiris, a leading global environmental, social and governance (ESG) research and analysis firm.

Speaking on the sidelines of Societe Generale’s inaugural Asian Sustainable & Positive Impact Conference in Singapore, Macresy noted the recent surge in positive impact finance across the region.

It used to be mostly European investors coming to Asia to buy some green bonds…Now you have local issuers willing to issue sustainable or green bonds matching Asian investors’ appetite,

Juliette Macresy
Head of Greater China and Southeast Asia Markets - Vigeo Eiris

Indeed, a growing number of regional issuers are coming to the markets,[1] encouraged by a generational shift sweeping Asia, which is witnessing a transfer of wealth from older investors to more socially minded millennials.[2] As a consequence, issuers are seeing the region’s investors begin to actively integrate ESG factors into their investing practices.

Playing catch-up

Societe Generale, which expects to arrange 100 billion euros in green financing worldwide by 2020,[3] sees a growing appetite in Asia for green bonds. Vigeo Eiris has a similarly positive outlook, having launched its Asia operations in Hong Kong last year.

We are really convinced that it’s the right time to be here in Asia, given the importance of the region’s markets and the speed at which Asia is catching up with the West on sustainable and green finance, as well as its future potential,

Juliette Macresy
Head of Greater China and Southeast Asia Markets - Vigeo Eiris

However, the market is still evolving and challenges on this journey remain. Two of the biggest obstacles, according to Macresy, are transparency and disclosure.

For sustainable finance to work, she explained, issuers need to be open not only about how they are using the funds raised from investors, but also about the impact their projects are having. And as investors become more knowledgeable about ESG and impact investing, issuers need to be prepared to answer some tough questions, including on their strategies to measure and mitigate the negative environmental impacts and social risks of a project.

“The complexity of disclosure and reporting obligations make (these) one of the biggest challenges,” Macresy said. “But it’s important for issuers to give that confidence to investors.”

Understanding ESG

Formulating a comprehensive ESG strategy, and engaging and educating stakeholders about that approach, help address the growing expectations of investors and meet global green bond issuance standards. Vigeo Eiris, which assesses socially responsible policies of green bond issuers has worked with Societe Generale to provide independent opinion on impact bonds in Europe.

In Asia too, such partnerships are seen as being invaluable to keeping stakeholders assured and informed about the impact of their investments, and in promoting the continued growth of the region’s sustainable finance market.

We now see all of this coming together to really make it happen for Asia, and we are definitely looking forward to working with more issuers and investors in the region,

Juliette Macresy
Head of Greater China and Southeast Asia Markets - at Vigeo Eiris