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Why is Singapore leading Asia into a Sustainable and Profitable Future

25/07/2018

After years of staying in the shadows of developed nations, Asia, which accounts for 60 percent[1] of the world’s population and a similar proportion[2] of global economic growth, is poised to take the lead in tackling some of the most urgent issues of our time, including climate change, economic inequality and mass migration, through positive impact finance.

And Singapore, where Societe Generale hosted its first Asian Sustainable & Positive Impact Conference on 5 July, is among those leading the charge. Long renowned as a regional financial hub, Singapore now finds itself at the heart of Asia’s sustainable finance movement.

Investors in Singapore are well-served by the city’s transparent and reliable legal, regulatory and financial infrastructure. Its entrepreneurial ecosystem provides an optimal environment for the creation of innovative yet effective sustainable finance products. Lastly, Singapore’s stable political environment and world-class governance practices aid policy-shaping, making the city an ideal platform to launch sustainable finance initiatives across Asia.

Leading by example

The city’s forward-thinking government, which has pledged its commitment to the Paris Climate Accord,[3] is engaged in efforts such as the Collaborative Initiative for Green Finance in Singapore,[4] while the Monetary Authority of Singapore is actively promoting the green bond market in Asia.[5] Independent think tanks such as the Singapore Institute of International Affairs assist the public and private sectors with in-depth research and thought leadership[6] on sustainability issues to benefit all stakeholders. The city’s private corporations too champion sustainable practices and green finance both internally and industry-wide.

The Stock Exchange of Singapore, or SGX, has taken decisive steps in this direction by mandating environmental reporting for listed companies,[7] all of whom are now committed to environmental, social and governance (ESG) investing practices. Singapore-based banks are among the most innovative in the world in this regard, setting benchmarks in green bond issuances as well as responsible business practices across Asia.

Convincing the skeptics

There are challenges, of course, to be met before all of the region’s investors consider positive impact financing. It is crucial to acknowledge that the region’s emerging markets have unmet needs, and that the push for sustainability will have to address concerns about the reliability and affordability of such initiatives. For this reason, it’s best not to expect a big bang, but to focus on building a proven track record through a gradual yet consistent approach.

In recent years, sustainability research models such as those designed by Societe Generale have done just that, proving that positive impact finance can indeed be profitable.[8] Looking ahead, Asia will require trillions of dollars to continue growing,[9] and products such as green bonds have tremendous potential to bridge the investment gap. With cities like Singapore driving change, Asia is better placed than ever before to grow in a sustainable manner.

The need of the hour, therefore, is – paraphrasing one of the speakers at the Societe Generale event – to convince skeptics to remove their heads from the sand, understand that being sustainable does not mean forfeiting profitability, and step forward to embrace positive impact finance. It is promising to see that in Singapore and increasingly elsewhere in the region, this process is well underway.

[1] https://www.unescap.org/our-work/social-development/population-dynamics 
[2] http://www.publicfinanceinternational.org/news/2017/04/asia-pacific-now-accounts-60-world-economic-growth-adb-says 
[3] https://www.gov.sg/news/content/today-online-singapore-formally-joins-paris-climate-change-accord 
[4] http://www.siiaonline.org/wp-content/uploads/2017/11/Collaborative-Initiative-for-Green-Finance-in-Singapore.pdf 
[5] https://www.straitstimes.com/business/invest/mas-partners-world-bank-member-to-spur-green-bond-market-in-asia 
[6] http://www.siiaonline.org/about-us/
[7] https://www.channelnewsasia.com/news/singapore/sgx-introduces-sustainability-reporting-on-comply-or-explain-bas-7972148 
[8] ‘Sustainability Research - Why ESG matters to institutional investors?’; Societe Generale
[9] https://www.adb.org/news/asia-infrastructure-needs-exceed-17-trillion-year-double-previous-estimates