Southeast Asia banks should amend environment policy, says WWF

Bloomberg

Banks and regulators in Southeast Asia should strengthen financial-sector rules and guidelines to promote funding for environment-friendly projects in a region threatened by deforestation and climate change, the World Wildlife Fund (WWF) said.
Measures to promote sustainable finance in the region are “high level,” and don’t involve the incentives or penalties which would get banks to properly integrate environmental policies into their lending practices, the WWF said in a survey of 34 large Southeast Asian banks published on Tuesday. The region’s banks have “significant leeway” to decide which environmental risks are material, the report said.
“Only when banks and policy-makers in charge of climate change and sustainable development work together will we create a level playing field for banks and prevent a race to the bottom of sustainable finance standards,” said Jeanne Stampe, the WWF’s head of Finance & Commodities for Asia.
Though Southeast Asian nations have committed to the 2015 Paris Agreement on climate change, they have yet to align fully their regulations governing finance, the WWF said. Sustainability isn’t yet formally included in the mandate of the boards or senior management of banks in the region, the report added. The WWF study looked at information disclosed by the 34 largest banks in Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam. Only 12 of them have taken steps to direct their lending toward more sustainable activities through the use of exclusion lists and sector policies, the report said, without disclosing the names of the individual banks.
The Southeast Asian region has suffered from rapid deforestation due to the growth of palm oil, pulp and paper, and rubber industries, as well as infrastructure projects, the WWF said. Banks’ lending to those activities could be affected by any change in regulations and by the agricultural sector’s vulnerability to climate change, it added.