KUALA LUMPUR: Green financing instruments are on the rise in Southeast Asia, demonstrating the region's response to issues linked to environmental degradation, HSBC said.
Asean issuance of green bonds almost doubled to US$7.8 billion in 2019 from US$4.1 billion in 2018, according to Cimate Bonds Initiative Asean Green Finance State of the Market 2019 report, which is supported by HSBC.
The report said Asean issuance represented three per cent of the global total and 12 per cent of the Asia Pacific region in 2019, up from one and five per cent in 2018, respectively.
Cumulative Asean issuance since 2016 stood at US$13.4 billion as of December 31 last year.
The report also focuses on policy developments among Southeast Asian nations relating to green debt issuance, including the Asean+3 Bond Market Forum and Asean Bond Market Initiative.
HSBC Asia Pacific sustainable finance managing director Jonathan Drew said while this signalled a positive growth of green instruments in Southeast Asia, the findings also revealed the disparity between nations and the enormous amount of work still to be done.
"Action now, to re-start economies on a lower carbon pathway, is the key to avoiding a climate crisis and the associated costs of crisis response and bring about the huge benefits of a better quality and more resilient future of opportunities.
"Cooperation between governments, institutions and corporates across Southeast Asia can deliver this and finance has shown it has a critical role to play," he said.
The report said Asean had 39 green bonds/loans/sukuk issuers cumulatively, with 20 issuers issuing 32 green debt instruments in 2019, up from 15 and 16 in 2018 respectively.
It said financial corporates had become the largest issuer type of green bonds in Asean, representing 29 per cent of the total, overtaking non-financial corporates with 27 per cent and sovereign issuers with 15 per cent.
Green loans also feature strongly in Southeast Asia, with US$2.9 billion issued, representing 22 per cent of the total, largely related to Singapore's real estate sector.