Sustaining ASEAN Finance: A Technical Analysis of Sustainable Finance in ASEAN

1. Executive Summary

The ASEAN Working Committee on Capital Market Development (WC-CMD) and the ASEAN Capital Markets Forum (ACMF) have initiated a key agenda to support ASEAN’s sustainability goals. The Joint Sustainable Finance Working Group (JSFWG) has been established to enhance the role of ASEAN capital markets in aligning capital with the sustainability agenda. This whitepaper dives into the intricate details of this initiative, its implementation, and the opportunities it offers.

2. Technical Background

The establishment of JSFWG was aimed at co-ordinating the sustainable finance agenda, including the implementation of recommendations in the WC-CMD Report on Promoting Sustainable Finance in ASEAN and the ACMF Roadmap for ASEAN Sustainable Capital Markets. Both documents have been developed to enable capital markets to support sustainability.

3. System Architecture

The Sustainable Finance Ecosystem for ASEAN is built on three pillars: the ASEAN Taxonomy to serve as a common language; Transition Finance Standards to enable financing for realistic transitions in the region; and Disclosures to support informed decision making.

4. Implementation Details

The JSFWG Industry Advisory Panel (IAP) was set up as the core industry interaction point to support JSFWG’s efforts, engage with the private sector and facilitate feedback on sustainable finance initiatives. The IAP, established in 2021, comprised four Working Groups – Taxonomy, Transition Standards, Disclosures, and Strengthening Demand and Supply for Sustainable Finance.

5. Code Examples

In terms of organization and participation, the IAP included 22 member organisations from the financial ecosystem – capital markets, banking and insurance, as well as other finance professionals and financial services providers.

6. Performance Analysis

The IAP facilitated a forum for members to provide independent diverse perspectives from across the financial sector, providing valuable input and feedback to WC-CMD and ACMF.

7. Security Considerations

Given the importance of security in sustainable finance, the IAP members had the responsibility of providing input to WC-CMD and ACMF at scheduled intervals, as well as on an as needed basis. They also provide information and feedback individually on a continuous basis.

8. Troubleshooting

Issues relating to the sustainability agenda, taxonomy, transition standards, and disclosures were addressed by the respective working groups under IAP.

9. Conclusion

ASEAN’s sustainable finance initiatives mark significant steps towards orienting capital markets towards sustainability. The creation of the JSFWG and IAP aligns with the global shift towards sustainable finance and provides a structured framework for engagement and implementation.